The latest cost reduction measure initiated by Gearbulk is the renegotiation of charter rates with Japanese shipowners who have their vessels on long term charters to the company. As an industrial tonnage provider, Gearbulk needs at all times to operate a competitive fleet balanced with cargo commitments; a number of the charter contracts made in earlier years are based on newbuilding prices and rates which are no longer sustainable going forward.
“The unforeseen and unfortunate pandemic crisis adds further strain on an already difficult international business environment, and everyone needs to adjust their expectations and adapt to this new reality. It is ‘adapt quickly or die slowly’,” says Chairman Kristian Jebsen.
“The recent negative development comes on top of a grim dry cargo shipping market that has struggled with unsustainably low freight rates for several years. The business of Gearbulk, like most other international shipping companies, is also negatively affected by this situation. Although the challenges are caused by events beyond our control and influence, we continue to identify and impose any measure within our power to fight the challenges, with the view to protect the business and safeguard the future interests of our employees, business partners and other stakeholders,” Jebsen says.
The company has over the last few years implemented effective counter-measures through a substantial cost reduction program, a wide-reaching organizational restructuring, a bank debt rescheduling as well as a sale and lease-back program for several vessels in the Gearbulk fleet.
In addition to such cost savings and continued financial backing from its owners, the K. Jebsen family and Mitsui O.S.K. Lines (MOL), Gearbulk has taken the lead in industry consolidation by forming the world’s largest pool of open hatch carriers. The G2 Ocean pool was put together with Grieg Star Shipping for the marketing and operation of the two companies’ combined fleets. This initiative has been very successful and provides the customers with greater flexibility, reliability and competitive freight rates through the combined reputation of Gearbulk and Grieg Star, the experienced and professional G2 Ocean organization and the world’s largest fleet of open hatch vessels.
“I think we have to realize that the current challenging climate, abound with uncertainties and unpredictability, will continue for the foreseeable future. Nobody is immune to the negative effects of this disruption, and everyone exposed to international trade will have to review their business model and the financial exposure from deals made in earlier years,” says Jebsen.
“We trust our Japanese partners will support this measure and adapt to this new reality, as other stakeholders in Gearbulk are doing,” Jebsen says.
Gearbulk is a long term, world leading player in the open hatch bulk shipping segment, controlling a combined fleet of about 70 open hatch, other specialized and conventional vessels. The fleet is commercially operated by the G2 Ocean pool, where Gearbulk is the majority owner.