PACIFIC BASIN, prominent operator of handysize and supramax bulkers especially in Australasian trades, has described “an unusually flat market” in delivering its 2024 results.
While revenue increased from USD 2,296.6 million in 2023 to 2,581.6 million last year EBITDA fell from USD 347.2 million to 333.4 million and underlying profit from USD 119.2 million to 114.1 million. However, profit attributable to shareholders rose from 2023’s USD 109.4 million to 131.7 million in 2024. CEO Martin Fruergaard reported a return on equity of 7% and basic EPS of HK19.9 cents.
“The seasonal ups and downs that typically characterise the dry bulk market were largely flattened out by geopolitical and climate-related events, making it challenging to capture the full value of the market,” Mr Fruergaard said.
“Our large core business generated a contribution of US$178.4 million before overheads. Our average Handysize and Supramax daily TCE earnings outperformed average Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) indices by US$1,720 per day and US$710 per day respectively, illustrating the challenges we had in 2024 to optimally position our Supramax fleet and maintain a high Supramax outperformance.
“Our operating activity contributed US$17.4 million before overheads, generating a margin of US$630 per day over 27,610 operating days, with Supramax particularly undermined by the impact of geopolitical events on the freight market.
“Our operating activity continued to grow with operating days increasing 18% year on year. Our overheads and vessel operating expenses remain well controlled and sector leading – and are back to pre-Covid levels.”
Mr Fruergaard said reducing debt and utilising interest rate swaps to limit exposure to variable interest rate debt had helped to mitigate increases in finance costs in a higher interest rate environment.
“We are alert and prepared for geopolitical uncertainties and dry bulk market challenges in 2025, we remain positive overall about our sector’s fundamentals in the longer term, we continue to generate a healthy cash flow and remain financially strong, and we can be proud of the good progress we have been making in delivering on our strategy and priorities.”
Reviewing the market PacBasin said global dry bulk net fleet growth remained steady at 3% in 2024. Net fleet growth in the minor bulk vessel segments accelerated to 4.1%, driven by an 18% increase year on year in Handysize and Supramax newbuilding deliveries, whereas Capesize and Panamax deliveries decreased.
Scrapping of the total dry bulk fleet decreased by almost a third year on year on the back of improved and steady freight rates, with deletions (mainly in the Supramax and Panamax segments) totalling only 3.8 million dwt or 0.4% of the existing global dry bulk fleet.
Global economic growth is expected to remain at a stable yet underwhelming 3.3% in 2025 and 2026 amid divergent growth paths and elevated policy uncertainty, according to the International Monetary Fund. Inflation, interest rates and tariffs are also all likely to continue to undermine dry bulk trade growth, which Clarkson’s forecasts at 1.3% for the year.
The geopolitical turbulence of last year will continue in 2025, amplified by the uncertainty of what may come out of the new US administration. But while more tariffs and protectionist policies may undermine trade, unforeseen shocks, disruption and other changes in the geopolitical landscape can equally support tonne-mile demand for shipping.
“We expect to see some volatility return to the dry bulk shipping market in 2025,” PacBasin said.
