Concordia Maritime, which has long been under financial pressure, wants to turn four tankers into container vessels. ”We are ready to make a deal,” says CEO.
Swedish product tanker carrier Concordia Maritime, with Stena Group as main shareholder, seeks to convert four product tankers into vessels capable of hauling containers and to then either sell the ships or charter them, according to CEO Erik Lewenhaupt.
”We are ready to make a deal if there are buyers for the ships. Either in the form of a charter agreement or a purchase of the converted vessels at the turn of the year 2022-2023,” says Lewenhaupt in an interview with WPO.
We will not convert based on speculation. We want a contract in hand before we do it
ERIK LEWENHAUPT, CEO, CONCORDIA MARITIME
”We have and have had discussions with yards, container lines and operators about our project. But we will not convert based on speculation. We want a contract in hand before we do it.”
In a technical study, Concordia and two partners have examined the options of converting the so-called P-MAX tankers. One of the partners is Stena Teknik, the other an unidentified German consultancy working with ship designs.
They conclude that Concordia would be able to change four of the carrier’s currently owned P-MAX tankers into container feeder vessels, each with a capacity of 2,100 teu.
Financially strained tanker carrier
Concordia has just presented its results for the first quarter of the year, with a deficit of SEK 30.4m (USD 3m). This result, however, was an improvement upon the deficit of SEK 120.2m seen in the same period of last year.
The Swedish tanker carrier has spent the beginning of the year on divesting from its fleet, selling two P-MAX ships during the period, with one other tanker up for sale. This could bring the fleet down to seven P-MAX vessels.
Seven tankers have been chartered out to another Stena-controlled tanker carrier, Stena Bulk, on a five-year charter deal running until 2026. Furthermore, Concordia commands a Suezmax crude oil tanker, commercially operated by Stena Bulk and on the spot market through the Stena Sonangol Suezmax Pool.
We are cautiously optimistic regarding developments on the market, which, however, has been marked by dramatic events like the war in Ukraine
ERIK LEWENHAUPT, CEO, CONCORDIA MARITIME
The last P-MAX is on charter with US-based Crowley Government Services, which has leased it to the US military with a US flag and crew.
The listed tanker carrier, with Stena Group as main shareholder, hasn’t been able to present a profit since 2016.
”We have 4,000 shareholders, with Stena Group being only one. Of course, it’s important for us to leave no stone unturned in order to create strong returns, so we’re working toward that for all our shareholders,” says Lewenhaupt, who took over from Kim Ullman as CEO at the turn of the year.
Ship values possibly to be upgraded by millions
Will Concordia Maritime secure a profit this year for the first time since 2016?
”It’s difficult to say. We don’t make forecasts as such. The fundamental conditions look positive. Fleet growth is relatively low, and there aren’t many new orders for tankers so far this year. Scrap prices are on a record high, and higher bunker prices should also mean that more older tankers are sent to scrapyards,” says Concordia’s CEO.
”We are cautiously optimistic regarding developments on the market, which, however, has been marked by dramatic events like the war in Ukraine.”
Both in crude and in product tanker, this year has seen rapid progress. For crude, things have gone slightly backwards, to the levels seen before the Ukraine war broke out on Feb. 24 ”except cargoes from the Black Sea and the Baltic Sea. Here, rates are high,” Lewenhaupt points out.
Erik Lewenhaupt, CEO, Concordia Maritime. | Photo: Concordia Maritime
The ongoing upswing on the tanker market could also mean that Concordia is going to upgrade the value of its fleet in connection with its half-year results – after having booked a large write-down at the beginning of 2022.
In February this year, the carrier wrote down its ships by SEK 268m, bringing the fleet’s total value to SEK 1.97bn.
Concordia makes fleet valuations every six months to test whether there is a difference between the book value of the vessels and the market values estimated by shipbrokers.
”It’s true that asset values in general seem to have risen. So Concordia Maritime’s values will probably also undergo a positive development ahead of June 30,” Lewenhaupt says.
