Quarterly March 2012 - Odfjell

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Odfjell Quarterly EDITOR: Margrethe Gudbrandsen EDITORIAL COMMITEE: Karin Ryland Blom, Brit A. Bennett, Matt Duke, Geirmund Drivenes, Leif Gunnar Alvær, Theo Kruithof, Siri-Anne Mjåtvedt, Henning Løseth _DEF9889 CORRESPONDENTS: HOUSTON: Rebecca Snyder PHILIPPINES: Jennifer Franco Deadline next issue: 10 May 2012 Design: Bruno Blanchard, Cox Graphic production: Jannicke Gildernes, Cox Print: Scanner Grafisk AS Cover: Photo by Thomas Kohnle Photo this page: Photo by Thomas Kohnle. Texts submitted to Quarterly may be subject to editorial adjustments. Highlights Port calls: Area of improvement 04 Keys to efficient port calls 04 Efficient tank cleaning 06 Port captains role in port efficiency 08 Efficient crew change 09 OTR improves environmental and safety performance 10 Chairman’s Message 12 Landmarks New terminal joint venture in China 13 Encouraging developments in the spot marked 13 Increased jetty capacity at OTR 14 New jetty at OTK 14 An incredible ‘maiden’ voyage 15 Houston Chartering expanding 15 Portrait New man in Oman 16 Briefings New Compliance Officer and Designated Person 17 Emphasis on vetting 17 Maintenance management improvment project 18 Corporate Social Responsibility Council established 18 Odfjell Terminals (Charleston) in progress 19 Stowing for tomorrow 20 New demurrage tool in progress 21 Ice training 22 MOPS 23 12 CONTENTS QHSE Success factors for developing Odfjell . Ship Managements safety culture 24 Piracy 26 Training on board campaign 26 Personnel 27 Fleet and terminals 30 Offices and addresses 32
Jan A. Hammer Dear Colleagues, February 9th we presented our 4Q11 results, and with that also our full 2011 annual results. Most of the analysts following our company expressed disappointment, saying they had expected better figures. Their conclusions however, were mostly that the chemical tanker market during 2011 had not developed as favourably as predicted; by us, by the majority of brokers and by our competitors. However, this is not entirely correct. If you look at spot freight rates for instance, you will notice a significant improvement from July 2011 until the end of the year; almost 30% up. If you ask our customers, they do not understand therefore, when they hear shipping people talk about the market being so bad. And we can appreciate this view since the rates they pay, including under contract of affreightments, historically seen, actually are at a relatively high level. The reason this is not reflected in equally better results for us is the simultaneous rise of bunker cost, which now counts for more than 50% of our voyage dependent costs. Our average price for bunkers in 2011 was USD 635(!) per tonne as compared to USD 467 per tonne the preceding year. This counts alone for as much as USD 95 million on an annual basis. As you can imagine therefore, the cost of bunkers is our biggest economic concern going forward. At the time of writing, the oil price is around USD 125 per tonnes and the equivalent price of bunkers (360 CST Rotterdam) is about USD 710 per tonnes. Our concern is twofold; the main issue being that the chemical tanker market, despite the relatively high freight rates, remains unsustainable. Freight rates actually need to be brought to a new level, substantially above the 2007 all-time-high in order to fully compensate us for the added cost. I’m not sure whether brokers, customers and even our own organisation fully appreciate this challenge. The other concern is that a consistently high and increasing oil price is a threat to a much needed and anticipated recovery of the world economy; and thus also the volumes to be shipped by chemical tankers. We can hope that the oil price will come down, but it does not look very likely. Hence, continued fuel efficiency efforts are of the essence. When I claim that the market is not sustainable at current levels, it is proven by the fact that companies like Dorval, Eitzen Chemicals and BLT have ended up in situations of distress. By not being able to service their debt, they automatically have become the talk of media, banks and investors. Whilst Dorval seems odfjell quarterly magazine odfjell QUARTERLY magazine to end up in a new structure with Chinese Sinochem as part owner, the future seems highly uncertain for the two other companies. Fortunately, we are not in a similar situation. It should be mentioned that market prospects are gradually although slowly improving. With still limited ordering of new tonnage, the gap between supply, as represented by the total fleet, and demand is developing in a direction of more tightness. According to bankers, there is even a new and growing optimism in shipping. One of the reasons is because the prices of newbuildings have come down. That is also the case for some types of ships in which we have an interest. For the large and advanced stainless steel ships though, we are still far from reinvestment grade price levels. But there are also factors that obviously can quickly kill the emerging optimism. Geopolitics, market conditions and the circumstances that affect these, we can do nothing about. Most important therefore, as far as we are concerned, is that we all pay attention to our respective duties, thus avoiding that we end up with incidents, accidents or other types of non-conformities. Despite the spills and leakages at OTR last fall and all the negative publicity associated thereto, 2011 showed overall improvements in terms of our QHSE performance. That is a conclusion based on the development of our QHSE KPIs. However, we still lack reliable overall measures of our QHSE performance. Therefore, one of our targets for 2012 is to establish a defined overall measurement. At the end of the day though, it still depends on the involvement and attitude of you all as individuals. I trust I can count on you also in this respect. To sum up; a generally better outlook but still with a high degree of uncertainty. We have reason to be a bit more optimistic than we were a year ago. That has also to do with last years’ transactions, which strengthened our balance sheet and thus, gave us more room for manoeuvring. And there are opportunities out there, so 2012 might in fact become a very interesting and good year for Odfjell. Let’s all work to make that vision come through. NR.04/ 11 3
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Quarterly March 2012 - Odfjell

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