Strategy dry cargo and tankers

Dry cargo

The Company aims to be a market leader in the four dry cargo segments: Post-Panamax (starting in 2009), Panamax, Supramax (largest Handymax vessels) and Handysize. To realise this goal, the Company is focusing on the following areas:

• Critical mass – It is important to develop critical mass and a strong market profile. Although size is not a goal in itself, it does give NORDEN the ability to offer its customers a better level of service. Critical mass affects positively the Company’s ability to attract new customers and maintain a high level of efficiency and exploitation of the fleet. The Company has already obtained major economies of scale in the Panamax and Supramax segments, and it is the Company’s ambition to continue to develop these segments. In addition, based on its strong customer relations in the Panamax and Handymax segments, NORDEN will extend its activities within the Handysize and Post-Panamax segments. The Company also wishes to develop critical mass in these segments and has already established a major newbuilding programme.
• Expansion of the core fleet – The increasing freight rate volatility has made it more attractive to control long-term tonnage, as this allows the Company to achieve very attractive earnings in periods when rates are high. NORDEN’s core fleet has therefore become more attractive, and the Company will increase the core fleet’s proportion of the total dry cargo fleet.
• Portfolio management – NORDEN controls a large portfolio of owned and chartered tonnage, contracts of affreightment (COAs), forward freight agreements (FFAs) and tonnage chartered out. The organisation is continuously striving to exploit market conditions and, as the business volume increases, has more opportunities to use the capacity and thus optimise earnings through active management of the portfolio.

Tankers

NORDEN’s goal for the coming years is to establish a greater presence in the product tanker market. The Company assesses that the product tanker market will in the future present a better risk/return ratio than the Company’s crude oil segment, Aframax. Therefore, NORDEN will in future focus on a smaller operator activity in Aframax, having sold off the last of its Aframax tonnage in 2007. The tanker market is characterised by consolidation among the providers, driven by major listed companies. Consolidation among oil companies means that the customers are getting larger, and certain customers – primarily global oil traders – are themselves entering the shipping market, which makes it more difficult to obtain capacity on short-term charter as the owners prefer to charter out vessels to these customers.

• Product tankers – The product tanker tonnage is employed through the Norient Product Pool, which is among the three largest product tanker pools in the world. With its partner Interorient Navigation Company Ltd., NORDEN is continuously expanding its fleets in the Handysize and MR product tanker segments through contracting of new vessels as well as through long-term charters, in order to achieve greater strength and market profile. The pool operates a large fleet of ice-class vessels in order to meet the customers’ demands for year-round operations in ice-filled waters.
• Expansion of the business – In 2008, the Norient Product Pool has started up a new activity in the LR1 segment. The business thus also includes the larger, 60-75,000 dwt vessels. This move was made to be able to offer customers an extended service in light of the changing transport patterns for refined oil products. These changes are expected to become even more apparent in the future.