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Pacific Basin pursues fleet renewal and growth strategy

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Dry Bulk,

Pacific Basin Shipping Ltd, one of the world’s leading dry bulk shipping companies, has announced the successful purchase of four second-hand Ultramax vessels, one second-hand Supramax vessel, and one second-hand Handysize vessel as part of ongoing efforts to grow and renew its fleet.

During 2022 asset prices approached historical highs which allowed Pacific Basin to sell eight of its smaller, older Handysize vessels, crystallising value and further optimising its fleet. The company will reportedly continue to look for opportunities to divest these smaller older Handysize vessels, depending on market conditions, while also taking opportunities to purchase vessels which it feels will fit its longer-term strategy to continue to grow its fleet, with particular emphasis on Supramax, Ultramax, and larger Handysize vessels as values have softened.

The company expects reducing global fleet growth and improving demand for commodities to result in higher average dry bulk freight rates despite short-term headwinds. Pacific Basin’s strong balance sheet provides the flexibility to invest counter-cyclically, which has been a key strength of its strategy, while its customer-focused business model, high laden utilisation, large owned fleet, competitive cost structure, and ability to outperform the market indices position it well for improving demand and supply fundamentals ahead.

Including the two Ultramax vessels and one Supramax vessel purchased in the latter part of 2022, and these ships now acquired, Pacific Basin expects to own 73 Handysize and 50 Supramax ships that are well suited for its customers and trades, and including currently chartered ships it will have approximately 263 ships on the water. The average age of the company’s owned ships is expected to decrease from the current 13 years to 12 years, which it considers ideal for optimising its return on capital, while minimising residual value risk in the transition over time to zero-carbon technology vessels.

Martin Fruergaard, CEO of Pacific Basin, said:

“We remain committed to our long-term strategy of further growing our Supramax/Ultramax fleet and renewing our Handysize fleet with younger, larger and more efficient vessels, thereby further optimising our fleet to more easily meet tightening environmental regulations. This transaction is a further step in the execution of this strategy, while in parallel we are continuing to cooperate in the investigation and development of zero-emission vessels and investment in related bunkering infrastructure, as we accelerate the transition and make zero-emission-ready vessels the default choice by 2030.”

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