Company Magazine for the Odfjell Group - March 2005

Company Magazine for the Odfjell Group - March 2005 Company Magazine for the Odfjell Group - March 2005

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Chairman’s Message Building sophisticated stainless steel chemical carriers is not for every shipyard. Our friends in Poland, Stocznia Szczecinska, have done it for 30 years. In 1975 we received the first one, the Bow Fortune. Our twentieth, and the fourth one in the current program, the 39,900 tdw Bow Sky will be delivered mid April. The yard is solidly booked with container ships and other vessels, but inbetween, fortunately, during the next two years or so, they will still be able to deliver to us another four vessels. We even have the option of two more, with delivery in 2009. However, the price for those ships is yet to be determined. Due to the low dollar and today’s high price of stainless steel etc., the current 2009 newbuilding price is around USD 100 million per vessel. That’s a tall order so to speak. But such are today’s replacement realities. So why tell you this The fact is ours is a capital intensive service industry, and one that is exceedingly difficult to predict. The landscape of the chemical industry is changing. We have to try to factor in all these changes. Whilst our ships are mobile and flexible, even so we can never escape the basic law of supply and demand. What will the market be in 2009 Nobody has the answer; we certainly do not. As a company, what we do know is that we can hardly stand still and, that two or three large new ships are needed each year for us just to stand still. Yes, another tall order, you will fully well realize. But if we wish to maintain our position, that’s what it takes. We need to improve on our overall performance – otherwise we will not have the cash to continue to invest in new ships, and our position in the market and our ability to serve customers will decline. Put differently, in our case we must more than double our 2004 bottom line result (USD 86 million) to gain the capital just to stand still. The cost of ships is outstripping growth in profitability For the next few years, we have the benefit of having contracted for ships earlier. But that benefit will run out and we will pay much higher prices for the same vessels going forward. Our customers will recognize this, albeit grudgingly. Our customers require state-of-the-art vessels that do not simply transport their chemicals from port A to port B, but also exceed governmental health, safety, and environmental criteria as well as their own Responsible Care standards. In addition, they require a degree of flexibility, service and last minute cooperation to adjust to parcel loadings and scheduling that makes our business a truly individualized service. Importantly, their products are mostly high value, at least in relation to transoceanic shipping costs, and the chemical industry is currently doing very well, which in fact is why there is reasonable demand for our services. For us to continue to deliver the transoceanic shipping services to our customers on the standards that they and international bodies demand, we must continue to make the large capital investments in newbuildings. Whilst newbuilding costs are up (and significantly so) and the need for new vessels increases, there nevertheless will be ups and downs in parcel tanker freights along the way, in consequence of changing supply and demand. Estimating the world economy/the demand side of the equation is difficult particularly with the current lead times for ordering new vessels. Forecasting demand is complicated by the difficulties of predicting the important ton/mile equation and the ballast ratio. In other words, will the world’s chemical trading patterns permit us to efficiently use our vessels with a minimum of ballast legs – otherwise our investment in capacity will be underutilized, and we know what that means. Bill Clinton captured it best – “it’s the economy, stupid”. Either you recognize changing market forces and respond or you get run over by them. We need to ensure that our financial performance allows us to respond. So there you have it, scratch your head and have a nice day. Dan Odfjell Chairman of the Board Odfjell ASA 4 ODFJELL Quarterly March 2005

Commemorating the loss of Bow Mariner By Candice Mirasol, Odfjell Manila M/T Bow Mariner caught fire and exploded in the morning of February 28th 2004, with 27 crewmembers onboard, three Greek senior officers and 24 Filipino officers and ratings. Only six of the crew survived the accident that took place 50 miles east of Chincoteague in Virginia, US. On February 28th 2005, one year after the Bow Mariner accident, Magsaysay Maritime Corporation through their Crew and Family Affairs section, in cooperation with Odfjell Manila, organized a commemoration program for the families of the affected Filipino mariners. In order to cover as many family members as possible, a common thanksgiving mass was organized in three provinces in the Philippines: Cebu, Iloilo, and Manila. The aim was to honour all those who had perished, and at the same time give high regard to the ones who survived. The gathering in Manila was commenced with a thanksgiving mass led by a local parish priest, held with solemnity and grace. Mr. Alexander Querol, Head of Crew Manning Operations of Magsaysay Maritime Corporation, initiated the formal occasion by giving a welcome remark to all present; survivors and family members. Then, Capt. Kjell Johansen, Manager of Odfjell Manila, expressed the deep sympathy of Odfjell ASA, to all those who had been affected by this tragic event. In his warmhearted speech, he noted that the loss of lives on board Bow Mariner was not only felt by the families left behind but by the whole Odfjell ‘family’ as well. He continued saying that Odfjell is a company that places the crew and their safety as its first priority. Thus, as a consequence of this accident, Odfjell has initiated a thorough review of its procedures and routines both on shore and on board, to ensure that such an accident will not happen again. Gathered in commemoration and mourning. The event was concluded with a nice meal for the Bow Mariner families, survivors, and office personnel from Odfjell Manila and Magsaysay Maritime Corporation. The priest during the thanksgiving mass. The children chorale Capt. Kjell Johansen giving his commemoration address. ODFJELL Quarterly March 2005 5

Commemorating <strong>the</strong><br />

loss of Bow Mariner<br />

By Candice Mirasol, <strong>Odfjell</strong> Manila<br />

M/T Bow Mariner caught fire and<br />

exploded in <strong>the</strong> morning of February<br />

28th 2004, with 27 crewmembers<br />

onboard, three Greek senior officers<br />

and 24 Filipino officers and ratings.<br />

Only six of <strong>the</strong> crew survived <strong>the</strong> accident<br />

that took place 50 miles east of<br />

Chincoteague in Virginia, US. On<br />

February 28th <strong>2005</strong>, one year after <strong>the</strong><br />

Bow Mariner accident, Magsaysay<br />

Maritime Corporation through <strong>the</strong>ir<br />

Crew and Family Affairs section, in cooperation<br />

with <strong>Odfjell</strong> Manila, organized<br />

a commemoration program <strong>for</strong> <strong>the</strong><br />

families of <strong>the</strong> affected Filipino mariners.<br />

In order to cover as many family<br />

members as possible, a common<br />

thanksgiving mass was organized in<br />

three provinces in <strong>the</strong> Philippines:<br />

Cebu, Iloilo, and Manila. The aim was to<br />

honour all those who had perished, and<br />

at <strong>the</strong> same time give high regard to<br />

<strong>the</strong> ones who survived.<br />

The ga<strong>the</strong>ring in Manila was commenced<br />

with a thanksgiving mass led by a<br />

local parish priest, held with solemnity<br />

and grace. Mr. Alexander Querol, Head<br />

of Crew Manning Operations of<br />

Magsaysay Maritime<br />

Corporation, initiated<br />

<strong>the</strong> <strong>for</strong>mal occasion by<br />

giving a welcome<br />

remark to all present;<br />

survivors and family<br />

members.<br />

Then, Capt. Kjell<br />

Johansen, Manager of<br />

<strong>Odfjell</strong> Manila, expressed<br />

<strong>the</strong> deep sympathy<br />

of <strong>Odfjell</strong> ASA,<br />

to all those who had<br />

been affected by this<br />

tragic event. In his<br />

warmhearted speech,<br />

he noted that <strong>the</strong> loss<br />

of lives on board Bow Mariner was not<br />

only felt by <strong>the</strong> families left behind but<br />

by <strong>the</strong> whole <strong>Odfjell</strong> ‘family’ as well. He<br />

continued saying that <strong>Odfjell</strong> is a company<br />

that places <strong>the</strong> crew and <strong>the</strong>ir<br />

safety as its first priority. Thus, as a consequence<br />

of this accident, <strong>Odfjell</strong> has<br />

initiated a thorough review of its procedures<br />

and routines both on shore and<br />

on board, to ensure that such an accident<br />

will not happen again.<br />

Ga<strong>the</strong>red in commemoration and mourning.<br />

The event was concluded with a nice<br />

meal <strong>for</strong> <strong>the</strong> Bow Mariner families,<br />

survivors, and office personnel from<br />

<strong>Odfjell</strong> Manila and Magsaysay Maritime<br />

Corporation.<br />

The priest during <strong>the</strong> thanksgiving<br />

mass.<br />

The children chorale<br />

Capt. Kjell Johansen giving his<br />

commemoration address.<br />

ODFJELL Quarterly <strong>March</strong> <strong>2005</strong> 5

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