Pacific Basin Shipping’s supramax earnings lagged behind the prevailing market last quarter because it had difficulty repositioning its vessels and found it expensive to hire others.
The Hong Kong-listed bulker owner-operator underperformed the Baltic Supramax Index by $1,600 per day during the three months.
It said this was due to “the increased cost of chartering short-term core vessels required due to our high near-term cargo coverage in the Pacific, as we were unable to optimise our fleet due to limitations in the movement of vessels from the Atlantic into the Pacific”.
Its supramax fleet averaged time charter equivalent earnings of $12,220 per day during the quarter.
Its handysizes fared better, earning an average daily rate of $13,740 and beating the Baltic Handysize Index by $2,040 per day.
This is 35% higher than during the same period last year, while Pacific Basin’s supramax earnings showed 6% growth.
“There was a year-on-year increase in global dry bulk loading volumes driven by increased demand for grains, minor bulks and iron ore,” Pacific Basin said in its report.
“Market freight rates continued to exhibit limited seasonal volatility owing to fleet inefficiencies caused by disruptions in the Suez and Panama Canals.”
It remains optimistic, despite the risk of impacts on its business from slower global trade and economic growth, elevated interest rates and conflicts in Ukraine and the Middle East.
Pacific Basin’s core fleet consists of 127 handysize and supramax vessels.
Its owned and operated fleet stands at 282 vessels, including short-term chartered vessels.
“This positive perspective is supported by Chinese fiscal stimulus and continued fleet inefficiencies resulting from disruptions in the Suez Canal and conflicts in the Middle East,” Pacific Basin said.
Pacific Basin has covered 74% of its handysize days during the fourth quarter at an average TCE rate of $12,570 per day, and 84% of its supramax days at an average daily rate of $12,190.
Pacific Basin expects positive effects on vessel earnings this quarter by reversing provisions made for prior-period freight tax, but not to the same extent as in the final three months last year.
Meanwhile, the company’s share buyback scheme has been rolling steadily.
It confirmed it has spent $31.7m of the $40m it has allocated for repurchasing its shares. The buyback programme runs until the end of the year.
Pacific Basin sold two 2004-built handysize vessels during the third quarter and declared a purchase option on a 2016-built supramax.
It also took delivery of a long-term chartered 40,000-dwt handysize newbuilding.
Four 64,000-dwt ultramax newbuildings and a 40,000-dwt handysize will deliver on long-term charter this quarter.
