-Mr. Jan Rindbo, CEO
-Mr. Henrik Lykkegaard Madsen, Head of Asset Management
On November 18, 2024, I had the opportunity to interview Mr. Jan Rindbo, CEO, and Mr. Henrik Lykkegaard Madsen, Head of Asset Management, from Norden’s top management, together with my fellow journalist, Azumi Kashiwai. The interview took place at the Imperial Hotel in Tokyo at 2:00 PM JST.
The following is the interview article written by Kashiwai and published in the November 21 edition of Japan Maritime Daily. The full English text is provided below.
For the continuation of the Japanese article, please refer to Japan Maritime Daily:
(https://www.jmd.co.jp/)
Photo courtesy=Norden, JMD
-Activity in Japan
Mr. Rindbo: Obviously, Japan continues to be a central part of Norden’s business, and continues to be active in ordering new buildings, also time chartering new buildings and the cargo side with cargo clients. This year, we have placed a direct order for new buildings, and Japanese yards for 3 Capesize vessels. Including these 3 orders and long-term chartered vessels, the order book for the Japanese shipyard is 14 vessels now.
The pace of our new building chartering in Japan this year has slowed down a bit compared to last year. It’s a combination of rising prices and declining spot markets. So, the gap between new building costs and market rates is becoming bigger.
On the cargo side, our Japanese office had a good activity. Lots of fixtures with Japanese clients. It’s a good mix of many different customers, such as trading houses, end users, manufacturers, and utilities.
-About Chinese yard
Mr. Madsen: It’s fair to say that our main activity has always been with Japan, especially in terms of leasing business. We do it only in Japan. We don’t have any leasing business in China.
Over the years, from time to time, we have ordered ships in China. Especially back before the Lehman crisis, when every new building berth is very tight. So, we are in the same situation now. Capacity in Japan is very tight. So, we also ordered in China. Right now, we have 6 new building order books at DACKS, a Japanese/Chinese hybrid shipyard.
Regarding pure Chinese yards, we don’t have any ongoing negotiations. It is something we will consider the same way the Japanese owners are also now considered about Chinese yards. We must also recognize that China is the biggest shipbuilding nation in the world. But the majority of our relations and our main focus remain in Japan.
-About the 3Q 2024 result
Mr. Rindbo: It was another profitable quarter. We have seen many years of consecutive profits for Norden. In the third quarter, we have seen the overall profits have been a little bit lower. What we’ve seen specifically is more headwinds in the tanker market. We’ve seen crude tankers switching from crude trade into clean product trades. That has reduced the rates for product tankers because of the more supply coming from the crude tankers.
About the drybulk segment, our result is actually becoming better in the third quarter, but markets overall are still very flat, and even a little bit down. There was a downward trend on the smaller vessels towards the end of the quarter.
What we’re seeing overall is good demand for drybulk, but we’ve also seen that there’s been a growing demand for backhaul volume, such as steel products exports from China into the Atlantic. That has increased the number of vessels coming into the Atlantic region.
Usually, at this time of the year, you have more grain shipments coming from the Atlantic back to the Pacific which usually pushes up the market. But this year, because all the vessels already had cargo and were already moved into the Atlantic market before the grain season, that has cancelled any improvement from seasonal grain shipments.
-About the drybulk market in 2025 (including the effect of increasing Chinese yard capacity)
Mr. Rindbo: We are not so concerned about the supply side, because the order book is quite low. Even the extra Chinese shipyard capacity seems to be absorbed by container vessels, gas carriers and other type of vessels. The orderbook for drybulk is pretty steady at around 10% compared to existing vessels. The ratio is not high. So, supply side, we think is okay.
On the demand side, there is more uncertainty due to the political situation, and also maybe trade tensions between the US and the rest of the world from policy. But overall, we still expect healthy demand. One area to maybe a little bit concerned about is still China’s property sector.
-About the tanker market
Mr. Rindbo: The market is very volatile and very much driven by events in the market. So right now, we have a very negative impact from the switching of crude tankers into the product trades. However, that should reverse, especially as we get into the wintertime. We should see the double impact of having a reversal of the crude tankers switching out from the product tankers business and getting into the winter season, which usually has a higher demand for tankers. So, we expect tankers to rebound pretty much anytime, positive.
So, there should be some better tanker markets to start in 2025. But there’s a larger orderbook on product tankers that needs to be absorbed. Those will mostly be delivered in the second half of next year. So, we still think that at least in the first half, markets should have a pretty strong rebound.
-How Norden manage exposures
Mr. Rindbo: Norden has four major drivers in its business. We have dry cargo and tankers, so we can switch exposure between both segments. Then, we can change our exposure between asset-light operating by chartering vessels and asset-heavy operating by owning vessels.
I think most people don’t realize that Norden has become more asset-heavy in the last few years. We have invested in more tonnage. Then, of course, also with the Japanese long-term charter with purchase options. You can say that is also a way to have asset exposure.
Mr. Madsen: Over the last two years, we have been using our own fleet of tankers. We have done that primarily because we had a very high market. We wanted to capture some of that. On the contrary, in the last year and a half, we have made our sizable investment in Capesizes both new building and second-hand. So, this is where we, timewise, saw a good opportunity to go into the Capesize segment.
Mr. Rindbo: In that sense, our business is very flexible. I think that is the most important driver for our business. Maybe not always making the highest profits, but the ability to reduce our risks, and not being just an operator or just a shipowner or just in dry cargo or just in product tanker. We cover all these four areas, and then we can change our position a bit alongside that.
In previous years, we have made a lot of money in the drybulk segment for being asset-light. This year, we’re making much more money for being asset-heavy because of the high ship price. 2024 has been a challenging year for an operator. So, it changes a bit every year. It’s quite fundamental to our success as a group.
-About fleet exposure in 2024 and 2025
Mr. Rindbo: We started 2024 having more tanker exposure. Now, we are overall more overweight on dry cargo compared to tankers, including our Capesize investment. So, we are switching. We have already switched more exposure to dry cargo from tankers for the whole portfolio.
For next year, there’s still more exposure towards tankers because we expect a good tanker market in the first half of 2025.
-About entering Capesize segment
Mr. Rindbo: We have 3 owned and 1 long-term charter Capesize newbuilding in Japan. Also, We have invested in 9 second-hand Capesizes.
One of the reasons to enter the Capesize segment is to strengthen the service that we offer to our customers. Until early last year, we did not have Capesize, and we did not have multipurpose vessels either. So, we added Capesize in March last year, the largest vessel, and multipurpose the smallest vessel by acquiring Thorco Shipping in May last year. This means that in dry cargo today, we can offer our customers any cargo size.
When we are dealing with the biggest mining companies, they typically have cargo of all sizes. We can now service them on all cargo. It’s an important part of what we can offer to our clients.
With the big steel makers, we can carry both the iron ore into the facilities on Capesize vessels and coking coal on Kamsarmax. We can also transport steel products on Handyside or multipurpose vessels. It’s more full service. So, when our Tokyo office is talking to customers here in Japan, we can cover all sizes.
The other reason, by having more vessel classes on our assets, we can spread out the risks on multiple vessel types. So sometimes Capesize is much in favour, other times maybe Handysize or other sizes are much favour. By having a presence in all sizes, also having assets in all sizes, we can benefit from a more diversified portfolio.
We need to have critical mass in terms of operating, at least for servicing our clients. I think the number of Capesize vessels, let’s say around 25 vessels is more. We don’t need to own all 25 vessels. We can use time charter vessels and be flexible.
-About the Investment plan and new building price
Mr. Rindbo: My view is that the prices for bulk carriers’ new buildings are now more driven by the ordering of container vessels and other ship types. Not necessarily because there’s a strong demand to order bulk carriers. That is pushing up new building prices, including bulk carriers.
So, our view is that now is not the time to order aggressively, but to maybe order selectively. This is what we’ve done this year. We find areas where we think okay and can see some good value.
Also, when we look at Norden’s portfolio, we started ordering Capesize vessels this year, but we’ve also sold older second-hand Capesize vessels in the fleet. So, these activities do not mean that we are necessarily being very aggressive. It just means that we are replacing older vessels in the fleet with these newer vessels.
-About acquiring Norlat Shipping
Mr. Rindbo: Norlat Shipping is a very niche type of company focusing on forestry products exporting from Northern Europe. It’s an example of becoming even more cargo-focused in our operation.
-About Purchase Option conditions
Mr. Rindbo: I just want to say one thing, typically, when you have a purchase option price, you pay quite a bit of premium. So, there’s already some profit for the ship owner embedded into the purchase option price.
Mr. Madsen: When we have a discussion with shipowners, we insist on the purchase option because of the Danish tax system.
It’s also worth keeping in mind that it’s quite seldom that these purchase options make significant money for charterers. We saw a short period before the Lehman crisis when the market was really sky-high. And of course, there were a lot of purchase options being very valuable, and a lot of purchases being declared.
However, from 2010 until 2021-22 almost no purchase option was declared. The market was too low. Now, we’ve had a very good market for a few years. So, purchase options have become valuable again.
Mr. Rindbo: There’s a benefit for us as a charterer, but also the charterer takes the risk initially to commit to a 5- or 7-year charter, which typically on a new building, would be with delivery 2 years out in time. So, we take quite a lot of risk as a charterer for a long period where you have very little visibility on how strong markets will be.
I think one of the most important factors for Norden, we have 150 years of history, and we have always honoured all our obligations. Even though markets have been going up and down, and we have also as a company been through some pretty difficult periods where we’ve lost a lot of money on long-term charters, we have always honored our commitment.
When we look at these long-term charter arrangements, we see them as a long-term relationship. Of course, sometimes markets go up, sometimes they go down, sometimes favour the owner, and sometimes favour the charterer. But what is important from our side is that we always stand behind every agreement that we make, and we always honour them even when they’re loss-making.
I think that is one thing that every owner in Japan will benefit from dealing with Norden which is the assurance that we can perform also when markets are not developing as we expect.
-About the country risk of China
Mr. Rindbo: I don’t think that Norden has experienced any concerns or issues. Of course, we are not very much exposed to China. So, if you consider that 70% of the world’s Shipbuilding is in China, it is still a minority part of Norden’s newbuilding. We have much less exposure to China than the industry because we have enjoyed good relations in Japan.
But I do think these geopolitical risks, in general, are starting to for everyone have to prepare. It is not just China now. It’s also the US with higher tariffs. Global trade, in that sense, has some bigger challenges. But quite often we see that what happens is that if you have less efficient global trade, you need more ships to transport the same amount of cargo because you’re now not trading as efficiently as before. It is like what we have seen with sanctions on Russia or ships that cannot transit the Red Sea, So, in some sense, these few political concerns that we all have do not necessarily need to low demand for shipping.
〆インタビュー、ノルデンCEO ヤン・リンボー氏、アセット管理部門統括 ヘンリク・リュケゴール・マドセン氏日本で新造14隻発注・用船
デンマーク不定期船大手ノルデンはドライバルク420隻強、タンカー120隻強を運航し、巧みなエクスポージャー（市況変動にさらされる割合）管理と強固な用船ネットワークにより、継続的に高収益を上げている。来日したヤン・リンボーCEO（最高経営責任者）とアセット管理部門統括のヘンリク・リュケゴール・マドセン氏に来年以降の展望と日本での事業活動を聞いた。
（聞き手 柏井あづみ）
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