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Klaveness: Three challenges in dry bulk growth

Although Klaveness in Singapore is currently experiencing growth in the business along with high revenue when it comes to dry bulk, there are still three challenges luring on the horizon, explain two Klaveness executives in an interview with ShippingWatch.

SINGAPORE

The going is good for Klaveness in Singapore where the carrier with Norwegian roots is part of the current blossoming recovery in dry bulk as noted by many carriers operating in the island state.

But the recovery and the anticipation of a stronger 2017 do not mean that Klaveness' fortune is made just yet. On the contrary, Singapore poses three challenges for the company to work on, General Manager Punit Oza and Head of Panamax Pacific Michael Jørgensen tell ShippingWatch in an interview:

"First of all, we're seeing that many shipowners have not maintained vessels sufficiently due to the weak market which has been our reality for almost seven years," Jørgensen says, adding:

"This means that we are spending a lot of extra time inspecting vessels and making sure that all requirements are met, as some shipowners have slacked on requirements. It's a major challenge which is expensive for us but the only right thing for us is to ensure that the vessels we sail with are safe and meet regulations and not least customer expectations."

Changing reputation for pools

Klaveness recently hired a new employee to help solve the company's next big challenge. The job is to secure vessels for the two pools operated by the carrier, as well as gain better knowledge.

These two pools are the Bulkhandling Pool and the Baumarine Pool, with the former operating Supramax and Ultramax vessels while the latter works with Panamax, Kamsarmax, and Post-Panamax vessels. Both pools operate in the spot market.

"Pools have generally suffered from a very poor reputation in recent years. It's a challenge to convince the market that pools are not loss-making, but that they actually provide big advantages. Even though we have delivered good results, we have been frustrated that this hasn't caught on with customers. We hope to fix that now," says Jørgensen.

The final challenge concerns maintaining the focus set forth by Klaveness for the business last year.

Focus on three locations

In 2016, management decided that the carrier has too many customers spread across two many routes, and that the company should focus on certain areas in the trade covered from Africa across Asia to the US West Coast along with Klaveness' office in Shanghai.

"In a sense this is a strategy aimed at doing old fashioned shipping where you work with the customers and services close to each other and which drive each other. Meanwhile, we will focus on digitalization internally and externally and by launching a new digital platform which we think can provide customers with something extra on the core markets," says Oza, adding:

"But the challenge for us in choosing a focus on three core markets is maintaining this focus. It is always tempting to go in other directions and try new things and enter new markets. It's positive that the market is doing well, but we should stay calm and maintain focus.

He emphasizes that Klaveness' core portfolio consists of between 10 and 15 major customers, and several of these have grown out of the carrier's small vessels, gaining more cargo and then using the largest ships in the fleet. This kind of growth and customer relations are what Klaveness wants more of and wants to maintain.

Klaveness in Singapore closed a total of 800 set deals, known as fixtures, during 2016, and the Singapore division generates the majority of the revenue in Klaveness dry bulk division.

English Edit: Gretchen Deverell Pedersen

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