CEO’s Statement

Lasse Kristoffersen, CEO, Torvald Klaveness

It is now two years since the demerger of the Torvald Klaveness Group, and the re-establishment of Torvald Klaveness as a focused shipping company.

In this two-year period the owned fleet has grown from 13 to 17 vessels. Among the vessels added to the fleet in 2013, were two panamax gravity based selfunloaders. These represent the most effective and fuel efficient vessels of its kind in the world and were ordered in close co-operation with our partner CSL. The total assets have increased from 620 million to 790 million, close to a 30% increase.  With seven more vessels under order, Klaveness is now well positioned for a potential upturn in the markets.

2013 saw the return of volatility to the dry bulk markets as reflected in spot capesize freight rates which fluctuated between USD 4,200/day to USD 42,200/day. Part of Klaveness strategy is to capture volatility through its portfolio of freight, ship, and forward contracts, and the value of this portfolio strengthened considerably as a result of a stronger market in the second half of 2013.

2013 was also the year that ship values appeared to bottom out, and at Klaveness we have been preparing for this opportunity partly by increasing our investment capacity, amongst other through the issuance of a NOK 300 million bond in the beginning of the year. This improved capacity resulted in several transactions – whereby we increased our exposure in container, dry bulk and combination carriers.

Even though Klaveness is known for dry bulk competence through its significant presence as an operator and manager for such vessels, the company has not been invested in standard dry bulk vessels since the early 2000’s. Given a favorable market outlook, combined with historically low prices, it was decided to re-enter this market through the ordering of two vessels of the Kamsarmax size with options. Klaveness established Klaveness Bulk for this purpose, and attempted to raise external capital for a larger newbuilding program. This exercise coincided with a large improvement in freight rates, shifting the general market sentiment away from newbuildings and towards second hand vessels or nearer term deliveries. The capital raise was therefore terminated, but the effort lead to a partnership with Tufton Oceanic instead, for a combined newbuilding program at Jiangsu Yangzijiang Shipyard Co., Ltd. in China.

Klaveness ventured into large container feeder vessels through second hand purchases and a newbuilding order in 2010. In 2013 we started to take delivery of the newbuildings and were also able to swap one newbuilding into three re-sales for delivery early 2014. This cemented Klaveness as the leading provider of modern, fuel efficient container ships in the 2-3000 TEU market.

Cabu is a business with long and proud traditions in Klaveness and following historical low newbuilding prices in 2013, Klaveness negotiated a contract for two Cabu newbuildings. The order was finally concluded in January 2014, and Klaveness holds several options for more vessels – positioning us well for opportunities to come over the next few years.

In addition to securing further growth and renewing important contracts, Klaveness used 2013 to complete a larger internal re-organisation and system upgrades, resulting amongst other in the offshoring of accounting to our Manila office, and a downsizing in Oslo. These changes have resulted in both improved quality of operations and a lower cost base, and would not have been possible without the combined effort of many dedicated and hard-working employees.

Coming into 2014 I am cautiously optimistic about growth picking up in the world, which in combination with a lower fleet growth should bode well for shipping. The dark horse remains, as has been the case for many years now, whether China will continue its steady growth pace. Slower growth should be expected, but still enough to support what we believe will be an improving market over the next one to two years.