Stena Bulk Doubles Medium Range Fleet with Danish Merger
Stena Bulk is increasing its MR segment (Medium Range product tankers of 50,000 dwt) by acquiring 50 percent of the Danish shipping company Weco. This means that Stena Bulk has doubled its fleet in this segment from 15 to 30 tankers. Its objective over the next couple of years is to build up an operation with upwards of 50 vessels under the new brand name of Stena Weco.
Weco, which is part of the privately owned shipping group Dannebrog, is a market leader in the transportation of special-type products such as palm oils, edible oils and caustic soda. Weco currently operates some 15 vessels with peaks of 30-35 vessels, including short-term charters.
“This is in line with our new investment in worldwide MR operation with a greater focus on cargoes of edible oils. With Weco’s world-leading position in this segment and our strength in petroleum products, we will achieve major synergies in the long term. The P-MAX tankers (65,000 dwt) with their shallow draft are highly suitable for this transport pattern”, said Ulf G. Ryder, Stena Bulk’s President and CEO.
In addition to the 10 P-MAX tankers, Stena Bulk operates a further 15 tankers of around 50,000 dwt. A young, modern fleet with an average age of only 5.5 years. All the vessels have, for example, phenolic epoxy-coated cargo tanks – a prerequisite for transporting vegetable oils.
“We have nearly 20 years’ experience in the MR-segment and our earnings are already well above the average in a fragmented market. We are now strengthening our position in the spot market by building up a large fleet of first-class vessels together with an outstanding service level for our customers”, says Ulf G. Ryder.
“Weco’s strategy for nearly ten years of concentrating on edible oils and caustic sodas, where we now have a world-leading position in the MR market, has really paid off when such a large and well-reputed shipping company as Stena Bulk chooses to merge with us. Our fleets and not least our personnel have proved to be a perfect match and Weco’s employees are looking forward to working in the new company”, said Johan Wedell-Wedellsborg, owner of Dannebrog Rederi. “With the Stena’s strong balance sheet, we will be able to focus in a completely different way on winning more and larger freight contracts in our edible oil and specialty cargo segments. We will also be able to develop and increase investments in IMO III tonnage for the benefit of our joint investment.”
In 2010, the average earnings for Stena Bulk’s MR tankers were more than $5,000 per day better than the average market. With its new Danish partner, the company is building up even more muscle.
“Stena Weco will provide advantages of scale as a result of a more sophisticated charter network for its refined raw materials, which will increase the vessels’ earnings potential by a couple of thousand US dollars per day”, said Ulf G. Ryder.
The collaboration between Stena Bulk and Weco Shipping will be coordinated via the two companies’ head offices in Gothenburg, and Rungsted, north of Copenhagen. In Houston and Singapore Weco’s personnel will move into Stena Bulk’s existing offices. Johan Wedell-Wedellsborg, the owner the Dannebrog group, will be the new chairman of the board of the jointly owned company while Stena Bulk’s Senior Vice President Kim Ullman will be Managing Director and Weco’s Johnny Schmolker Deputy Managing Director. Jan Torgersen has been appointed as Vice President of Stena Weco and will be located in Houston.