Mats Berglund, a Swedish national, took over Pacific Basin three years ago when it was in its 30-year lows in the “lousy” markets. It was Hong Kong’s largest by fleet size.
Berglund’s immediate priority was to strip away non-core businesses and return the line to its core area of expertise – handy bulkers. Out went roros and its towage business, while Pacific Basin embarked on a fleet build up, ordering a slew of bulkers two years ago that are still delivering. The focus is paying off; the latest quarterly results from the Hong Kong-listed firm show its handysizes and handymaxes are outperforming spot market rates by 39% and 15% respectively.
It is best to be specialized and to focus on one or two sectors. So he dropped roros and towage and focused on handies where there was a good market penetration. The strategy was to redeliver expiring and long-term chartered-in ships and rely more on owned ships, complemented by shorter-term and index-linked chartered ships (the money maker in the market). Long-term charters burn cash. Pacific Basin operates 215 dry bulk ships of which 83 are owned, 41 are long-term chartered and 91 are on index linked or short-term charters. A further 15 owned and seven chartered newbuildings are scheduled to join the fleet over the next two years.
Pacific Basin has been positioned for the upturn by buying much during the downturn and so, it will seek out opportunities in the weak market to grow the fleet very selectively.
In its latest quarterly announcement Pacific Basin declared that today’s environment for dry bulk is an “extraordinary uncertain market” preferring minor bulk exposure over major bulk exposure.
Pacific Basin’s ships are trading 90% laden, something larger ships can rarely claim these days.
With Capesizes and Panamaxes, the whim of Chinese coal and iron ore imports rule the markets.