D/S NORDEN A/S – in for the long haul

BY CHARLES FERRO

BACK IN 1871 THE SHIPPING COMPANY DAMPSKIBSSELSKABET “NOR-DEN” A/S GOT A LISTING ON THE COPENHAGEN STOCK EXCHANGE AND SUBSEQUENTLY HAD A VESSEL BUILT. PAGE ONE IN THE HISTORY OF ONE OF DENMARK’S OLDEST MARITIME COMPANIES WAS WRITTEN. FOLLOWING THE MAIDEN VOYAGE, THE SHIPOWNER HAS EXPERIENCED EVERYTHING FROM TURBULENT WATERS TO THE DOLDRUMS, BUT IN THE PAST SEVERAL YEARS IT HAS SEEN A LOT OF SMOOTH SAILING. TO BE SURE, HARD WORK AND STAYING ON COURSE WITH A STRICT STRATEGIC PLAN PUT THE WIND IN D/S NORDEN’S SAILS.

D/S Norden is one of the world’s largest dry cargo operators of Handymax and Panamax bulk carriers

The central idea behind the company’s success is to utilize its active capacity while having additional capacity available when needed. Utilizing assets to turn a profit is no business secret, but Norden maintains flexibility in its operating assets to be able to quickly adjust to changes in global or regional economic tides. In total, the company operates 212 vessels in a mix of owned and chartered tonnage.

Looking into the future, Norden has an extensive portfolio with a total of 90 vessels scheduled for delivery.

“Our approach to the industry is that we are in it for the long haul and we do it by focusing on strong partnerships with customers and suppliers in order to generate long-term quality cash flows and manage risks,” explains executive assistant Peter Sand. “We’re here today, and we will be here tomorrow.”

FULL SPEED AHEAD
When Norden sent its 2007 annual report to the stock exchange, it showed a net profit of USD 703 million from total revenues of USD 2.9 billion, as compared with a USD 176 million profit from USD 1.2 million in revenues a year earlier. The boost in profit was largely due to increased incomes from Norden’s dry cargo operations and the sale of ships.

Five years ago, revenues reached just USD 477 million. Projections for 2008 anticipate a net profit that could be double the total revenues figure from 2003, a staggering increase.

“Norden has experienced some tremendously exciting years, where we have built up a large commercial fleet and where profitability has gone from good to very good,” says Sand.

Norden sold 16 ships in 2007, of which eight had been delivered, but the company managed to maintain an almost unchanged fleet of owned vessels throughout the year. This was achieved on the basis of the extensive portfolio of long-term chartered vessels with attached purchase options. The options were called and vessels subsequently sold. A mainsail in corporate strategy, where these ships provide the flexibility of the fleet needed to ensure profitability when tides are high and in times of the doldrums. The diversity of specializing in two shipping areas, dry cargo and product tanker, also provides a natural resilience when there are shifts in demand.

“What we do differently in terms of tonnage procurement is to use all the tools in the toolbox. We acquire capacity through various opportunities, and utilize the capacity in multiple ways though our global network of chartering and operations offices” Sand notes.

In this way, Norden is close to its customers and partners in local time zones and is able to operate business transactions, transports and port calls day and night all year round. At the same time, the company obtains close insight into how the markets operate locally.

CHANGING COURSE AND GAINING STRENGTH
A major turning point in Norden’s history occurred just over a decade ago. New faces entered managerial positions and brought new ideas with them. Throughout the years, the shipping company had established strong relationships with Japanese businesses and when the Asian Crisis struck in the late ’90s, the company was able to step into mutually beneficial agreements.

“We’ve been doing business with Japanese partners for more than 100 years, and I believe that this ongoing presence and a reputation for being a credible partner gave us the opportunity to sign some good contracts in which we took their ships on charter for a five-to-seven-year period. Attached to many of these charters was an option to buy the ship,” Sand says. “Our Japanese partners got some relief in a difficult situation and a good foundation for building up business. And so did we, in the sense that we were able to scale up capacity without making really major investments.”

The fleet, and general operations, have grown steadily in the past ten years. Now Norden has some 150 employees in its Copenhagen HQ, and six centres at strategic global locations in North and South America as well as the Asia Pacific region. Including crews on owned ships, the company employs more than 500 people globally.

KEEPING THE BLUE SEAS “GREEN”
Successful business means responsibility and Norden has been bolstering its responsible practices in “green” terms.

“Although Norden has traditionally been considered a green and efficient operator, we have put increased focus on the environmental and climate issues related to our business,” Sand states.

The company is taking a more systematic approach to social and environmental sustainability, including related climate issues in accordance with the United Nations Global Compact. Results of these efforts aim at more than just the environment. They encompass safety at sea and at work, occupational health, employee conditions and opportunities and other issues directly related to Corporate Social Responsibility (CSR).

Propulsion resistance and combustion optimization are the two main areas that affect the efficiency of a ship. To help attain climate- and environmentimproving objectives, Norden has introduced a range of activities supported through the funding of external research and more.

The company has signed an agreement to test the GreenSteam system on a ship due for delivery in September from a Chinese shipyard. Developed at the Technical University of Denmark and other institutions, GreenSteam is a smart system for adapting to conditions at sea, to make operations more efficient. Onboard servers collect data on sailing conditions. Data is then relayed to an onshore server for nearinstant analysis and the results are transmitted back to the vessel. The onboard server digests the new information and sends recommendations to the bridge for adjusting engine settings and vessel trimming to optimize vessel efficiency.

In the future, Norden will be operating vessels on the foamy waves from a headquarters located in a spot where they used to make foamy beer. In June, the company moved into “Bryghuset”, a former brew house of the Tuborg brewery.