Further improvements and implementation of our new business model
“In 2020, we further refined our business model and continued the transformation of becoming an asset-light handysize freight trader, and we are pleased to see the robustness of the results generated from the trading activities,” says CEO Niels Josefsen.
Main initiatives and events
- On 1 July 2020, the plan to establish Lauritzen Bulkers as an independent company wholly owned by J. Lauritzen was completed with economic effect retroactively from 1 January 2020. The aim of this restructuring was to provide the best conditions for the continued development of the bulk business’s activities.
- Our risk profile was further rebalanced through the additional reduction of our long-term commitments. This was substituted by increased activity in short-term (0-4 months) trading. We also increased the use of Freight Forward Agreements (FFAs) as one of the tools to improve risk management.
- Long-term time-charter tonnage was redelivered and replaced by shorter-term period vessels (1-2 years) at attractive rates, which led to a further reduction of our exposure and improvement of our result in 2020. These new period vessels will contribute to the positive result expected in 2021.
- A portfolio management system was introduced to improve risk management and support freight trading. The system assists us to monitor our exposure and provides vital information when taking positions and evaluating forward cargoes.
- Our commercial office in Dubai had its first full year with an expansion of its client base.
- We decided to open an office in Hong Kong as of 1 April 2021 in line with our ambition to grow our activities and further increase our client base with Chinese owners and industrial clients.
Commercial performance
In its first year, our short-term book activities (0-4 months) reflected strong performance resulting in a contribution of USDm 15.4. The long-term book’s active management of our owned and long period tonnage secured a USD 9,040 gross revenue per ship per day, or USD/day 1,037 above the BHSI-38 index, whereas our legacy time-charter fleet (long-term period vessels taken on charter before 2019) yielded a negative result of USD (2,962) per ship per day. Period vessels taken by the long-term book during 2019-20 contributed USD/day 1,216.
Outlook for 2021
Despite continued uncertainties regarding the COVID-19 pandemic, we expect dry cargo markets to strengthen in 2021, as supply growth will continue to decline combined with a pick-up in demand. On that background, we expect a positive net result in 2021 based on improved risk management, increased activity and further reduction of our legacy fleet.
Read the full Annual Report 2020 for Lauritzen Bulkers>>>
Source: Lauritzen Bulkers
