Danish shipping steams ahead

BY JACOB BENTHIEN

More than 10% of total world trade is today transported on ships either owned or controlled by Danish shipping companies, and the percentage is constantly increasing. Shipping has become Denmark’s second largest export industry.

Danish shipping companies are increasing market share like never before. They now control 8% of total world tonnage and transport more than 10% of total world trade by volume. And the growth continues. While world trade is growing by approx. 8% annually, Denmark’s share is growing by more than 10%.

“The Danish shipping industry is increasing its market share all over the world,” says executive vice president Jan Fritz Hansen of the Danish Shipowners’ Association. “We are already Europe’s largest shipping nation, and among the five biggest flag nations in the world.”

Danish shipping, which includes both national and international offshore activities, has been the country’s highest foreign currency earner for a long time, and is forecast to reach the magic figure of DKK 200 billion (approx. EUR 27 billion) in 2008. That represents an eightfold increase since 1990 in actual numbers and a doubling of the percentage of Denmark’s total exports. The industry now accounts for around 18% of Danish exports and – despite the low dollar rate – contributes about DKK 30 billion (approx. EUR 4 billion) to the balance of payments.

“The reason why Danish shipping is doing so well is because we have highly competitive framework conditions, and also because Danish shipping companies took an early lead in focusing on what we call ’quality shipping’. This comprises a range of parameters such as reliability, speed, efficiency and environmental friendliness, and a consistency of supply based mainly on the pool system that was essentially ’invented’ by Danish shipping companies,” says Jan Fritz Hansen.

The pool system consists of a network of shipping companies and ships which can supply transportation at a few days’ notice. So although Danish shipping companies own only 3% of total world tonnage, they control an additional 5% through chartering and contracting.

FACT BOX Danish shipping companies own 3% of the world’s total merchant fleet tonnage Danish shipping companies account for 5% of the world’s newbuild orders 7% of total world tonnage is controlled from Denmark Danish shipping companies transport 10% of total world trade Denmark’s population represents less than a thousandth of the world’s population

FINANCIAL MUSCLE
Danish shipowners currently own around 520 ships with a total of approx. 12 million tons deadweight under the Danish flag. They also own 12 million tons under foreign flags and control 35 million tons in other ways. And a record newbuild programme of more than 350 ships for delivery within the next three years will add a further 15 million tons to the total. Several Danish shipping companies have also clearly expressed plans to acquire foreign shipping companies as well as buying ships that are currently chartered.

“It says something about the financial muscle of Danish shipping,” says Torben Janholt. “Shipping is a very capitalheavy industry, and the international financial crisis has made many investors cautious. That benefits Danish shipping companies, which have built up their finances over many years and are now ready to put them to use.”

The newbuild programme, valued at EUR 10 billion, will further cement Denmark’s leading position regarding the average age of the merchant fleet. Danishowned and Danishcontrolled ships have an average age of less than seven years, while the world fleet has an average age of more than 13 years.

“Danish shipping operates and controls 10% of total world trade” – executive vice president Jan Fritz Hansen, Danish Shipowners’ Association. (Photo: Sisse Jarner)

“2007 was another record year for Danish shipping” – Torben Janholt, CEO, J.Lauritzen A/S, chairman of Danish Shipowners’ Association. (Photo: Sisse Jarner)

ACQUISITIONS AND NEWBUILD ENSURE THE FUTURE OF SHIPPING The chairman of the Danish Shipowners’ Association, director Torben Janholt of shipping firm J.L. Lauritzen A/S, sees a very positive future for the Danish shipping industry. Danish shipping companies are close to doubling their tonnage through an intensive newbuild programme. World trade is increasing, which accordingly increases the need for ship transportation. And although the cheap dollar and sharply rising prices of bunker oil have an impact on earnings, several Danish shipping companies have managed to deliver record results in 2007. “2007 was another record year for Danish shipping,” says Torben Janholt. “And it looks as if 2008 will follow suit. The bulk market is still at a very high level, and the tanker market has maintained high rates. The container market is more moderate, but is generally following the growth in world trade. The future also looks bright for speciality transportation,” says Janholt.