Hong Kong-based dry bulk shipping company Pacific Basin achieved a net saving of $23.1 million on its scrubbers, representing 38% of its original investment.
The company decided to fit scrubbers on 28 of its owned Supramaxes back in 2019 in order to comply with the IMO 2020 global 0.5% sulphur limit that took effect on 1 January 2020. The rest of the company’s fleet is using low-sulphur fuel.
Pacific Basin said that $7.4 million of the saving was achieved by closing out bunker price spread hedges.
Furthermore, the company fitted 66 of its owned ships with ballast water treatment systems (BWTS), and has arranged to retrofit its remaining owned vessels with BWTS by the end of 2022 to comply with the Ballast Water Management Convention ahead of schedule.
“We are constantly working on initiatives to incrementally reduce our fleet’s carbon intensity, and we have joined the recently formed Getting to Zero Coalition which is committed to exploring how to get commercially viable deep-sea zero-emission vessels into operation by 2030 – shipping’s moon-shot ambition,” Mats Berglund, Chief Executive Officer, said.
Commenting on the impact of COVID-19 pandemic on the market, Berglund said the company’s financial results for the first half of the year were impacted considerably by the pandemic, resulting in low freight rates. The dry bulk owner reported an underlying loss of $26.6 million, deepening the loss from the same period last year of $0.6 million while achieving a positive EBITDA of $79.2 million.
The net loss for the first six months of 2020 was $222.4 million, reversing from last year’s profit of $8.2 million, mostly attributable to a $198.2 million non-cash impairment of the company’s Handysize core fleet.
“Our overall competitiveness enabled us to navigate what we believe to have been the worst of the Covid-19 turbulence and positions us well for improving conditions in the second half of 2020 and going into 2021,” Berglund said.
In the first half of 2020, the company took delivery of three secondhand vessels (one Handysize and two Supramax) and completed the sale of one older, small Handysize. These transactions have expanded Pacific Basin’s owned fleet to 117 ships. Including chartered ships, the company had an average of 215 Handysize and Supramax ships on the water during the first half of 2020.
Due to uncertain market conditions, the dry bulker owner paused its spending on growing its owned fleet with larger, high-quality secondhand acquisitions. Pacific Basin said it would consider resuming ship acquisitions as the market recovers and once ‘particularly compelling opportunities’ emerge.
Commenting on the market outlook, Berglund said COVID-19 containment timeline is unclear, hence there is a greater than usual uncertainty around GDP and dry bulk trade forecasts.
“We believe many of the dry bulk demand forecasts for 2020, including Clarksons’ estimated 7.3% drop in minor bulk demand, are too bearish in view of the increasing levels of trade and enquiries we have observed in recent months, with a few exceptions.“
As explained, with Chinese activity significantly recovered and more dry bulk activity globally, the company expects a seasonally stronger albeit volatile second half and generally improved market conditions, assisted by stimulus measures and potential supply-side improvements including fewer newbuilding deliveries.
“Our healthy balance sheet and strong liquidity position, combined with our substantially larger owned fleet, our ability to outperform the market indices and our competitive cost structure, position us well for what we believe will be improved freight market conditions in the second half,” Berglund concluded.
The post Pacific Basin scores $23.1 million net savings on its scrubbers appeared first on Offshore Energy.