The below is an excerpt from an article in Tradewinds published February 11, 2020.
Written by Gary Dixon.
Norwegian chemical tanker owner Odfjell has reversed a downward trend on "unsustainable" contract rates after taking a stand last year. The company said it now has greater flexibility in opting for term deals or spot operations in better markets.
Downward trend reversed
Mørch said the downward COA trend was reversed in 2019.
"We believe so much in the fundamentals of this market that it did not make sense to extend or take new contracts at unsustainable levels. We have had to say no and we have had to take a firm stand in terms of how we were rating those contracts. Whether it was the markets helping us or whether it was us taking a stand, who knows, but now we are seeing the average contract rate is coming up."
The stance on COA rates has meant that Odfjell's contract coverage came down from 60% to 52% in the fourth quarter.
"We are exposed more to the spot market now, but as long as that market is strong that is okay. It allows us to operate more efficiently. We can pick and choose and optimize with a stronger contract portfolio."