Image: Golden Ocean Group
By Joachim Dagenborg
OSLO, Aug 23 (Reuters) – Golden Ocean, the bulk shipping arm of John Fredriksen’s business empire, expects a sharp rise in freight rates in 2014 and 2015 as demand rises and the supply of new ships slows down, its chief executive said on Friday.
The dry bulk market has been in a slump for several years due too many new ships being ordered from shipyards at a time when the world economy has slowed.
“Demand growth will be about five percent. The utilisation of the fleet will go up and the rates (for hiring ships) will follow,” said chief executive Herman Billung.
“We are not talking about a new 2007 boom, but it is a good upside from where we are today.”
This trend is not yet reflected in forward contracts, he added.
“The market for forward freight agreements for 2014 and 2015 is priced low. We can easily see an upside of 30 percent from what we see today,” said Billung, speaking at a presentation of the firm’s quarterly results.
Golden Ocean was considering buying used ships to position the company for this expected period of growth and said bank financing – a problem for many shippers recently – is unproblematic.
“Recently we have experienced that banks are competing against one another (for our business),” he told Reuters. “Of course it helps that our main shareholder is Fredriksen.”
The Oslo-born shipping magnate is a closely watched figure in the shipping world. In June he told Reuters he expected the dry bulk sector to grow again in the middle of next year.
Golden Ocean shares were up 5 percent at 0825 GMT due to the upbeat comments by the chief executive, outperforming an Oslo benchmark index down 0.1 percent.
Earlier on Friday, Golden Ocean reported core profits in line with expectations and said its next quarter’s operating profit should be on a par with this one.
Its operating profit rose to $39.8 million from $14 million a year earlier, on a par with analysts’ expectations for $39 million. (Writing by Gwladys Fouche)
(c) 2013 Thomson Reuters
Sign up for our newsletter