Concordia Maritime: Product tanker recovery is fragile

Stena Group's one tanker carrier Concordia Maritime is currently benefiting from the recovery in product tanker. But the recovery is fragile, says CEO Kim Ullman, in an interview with ShippingWatch.


The past year has been a good one for Concordia Maritime, which is one of Stena Group's two tanker carriers. The other is Stena Bulk, and CEO, Erik Hånell, shares a desk with Concordia Maritime CEO, Kim Ullman, at the office in Stena's Denmark terminal in Gothenburg.

In the early summer of 2014, Kim Ullman told ShippingWatch, that the development in product tanker would take a dive for the second quarter, but then it would slightly improve. It ended up improving a lot, and it is a happy Kim Ullman that greets ShippingWatch at the beginning of July 2015.

"The second quarter last year was horrible but we started feeling towards the fall, that several fundamental factors would change in the tanker market, and the recovery started to slowly emerge. We had expected it and so we were ready with an employment strategy for our fleet," says Kim Ullman.

Photo: Stena
Photo: Stena

The positive development has continued for the first half of this year with good employment for Concordia Maritime's fleet of in all 15 vessels. 12 of which are specialized product tankers in Stena's own design P-Max and ImollMax and three Suezmax tankers.

"The market is still good and continuing at a good pace. The decline of the oil price has really encouraged the general demand for oil and we will continue to benefit from this," says Kim Ullman.

But the journey for Concordia Maritime may be headed towards some speed bumps for the rest of the year.

A fragile market

"Product tanker is really good, but at the same time, we expect that it is a fragile market. A seasonal correction will take place during the fall. Maybe not as far or deep as the previous one, but it is as if we are waiting for the hangover that always comes after a good party. 2015 is however expected to be a good year overall," says Kim Ullman.

The recovery in product tanker has provided Concordia Maritime with the opportunity to focus on other markets which the carrier would like to gain strength in. Kim Ullman is in discussions with new customers in Australia, New Zealand and several places in Africa to find new opportunities for the tanker carrier. But unlike several of the market colleagues - for instance the newly restructured Torm which is ready to expand the fleet -  Concordia Maritime will hold back from letting the growth cause growing pains internally for the carrier.

Holding back

"We are really trying to hold back and we hope that our colleagues do not rush off to the shipyards. Overcapacity has always been a big challenge and new tonnage is the only thing that the industry can control itself. Our hope is that with longer routes and hopefully not as much new tonnage in the market, there will be a long-lasting, good cycle for the market," says Kim Ullman and continues:

"In general, my experience is that the market has been more disciplined in recent years than previously in shipping. This is also connected to the fact that financing is not as available as before and we hope that there will continue to be a calm investment level."

The financing drive has however been pretty strong for carriers including Robert Bugbee's Scorpio Tankers, which has also received money from equity funds for the many new orders for newbuildings.

"In the decades I have worked with this, the tanker market has been characterized by too many ships and too many shipowners, but especially in the past five years, we have experienced an increasing competition from new money. The kind of money that we have not seen before. Now we're in a situation where it cannot continue any longer and so we hope that the consolidation, which there are signs of in the industry, will continue," says Kim Ullman.

Concordia Maritime has been listed on Nasdaq OMX in Stockholm since 1984 and is the only one of Stena Group's companies which is listed. The IPOs in the first half of year have proven to be interesting for Hafnia Tankers among others, which hopes for a New York IPO, while Belgian Euronav has expanded its Brussels IPO with another in New York. The newly listed competitors do not worry Kim Ullman.

"Instead of looking at the competition, I think it is exceptionally exciting to look at a carrier such as Euronav. They are contributing in a reasonable way to strengthening the market. They buy existing tonnage and take the risk of not having the newest tonnage. I admire that, and I wish that we had more of those types of players in the market. Furthermore, there are many others which would like to be listed but that is not important to us."

Cooperation in the group

If you do look at the competition, Kim Ullman believes that cooperation with the many other companies in the Stena Group would help keep Concordia Maritime afloat in spite of corrections, consolidation and the competition on the market.

Concordia Maritime hopes to stay profitable in 2015

The collaboration with the sister company Stena Bulk is widespread, even beyond the sharing of the CEO desk. Six of Concordia Maritime's product tankers sail for Stena Weco, which is a pool cooperation between Stena Bulk and Danish Dannebrog. The same goes for two of Concordia's Imollmax ships. The four remaining product tankers at Concordia Maritime sail in a pool which Stena Bulk has along with Concordia Maritime. The last three ships in Concordia's fleet - the three Suezmaxes - sail in the pool Stena Sonangol, which is a cooperation between Stena Bulk and Angola's state oil company Sonangol.

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