Star Reefers, a leading refrigerated ship-owner, said net income slumped 60 percent in 2009 from the previous year because of the bankruptcy of a Russian charterer, lower freight rates and increased competition from container vessels.
Income fell to $16.2 million from $42.4 million on net revenue of $205.5 million against $212.7 million in 2008.
The Oslo-listed company, which controls a fleet of 46 owned and time chartered ships, earned $41.6 million before interest, tax, depreciation and amortization, down from $62.7 million a year ago.
St.Petersburg-based Sunway returned five long term chartered vessels to Star Reefers after its bankruptcy, which the company had to deploy in a weak spot market. This had a "significant" negative effect on 2009 earnings, Star Reefers said.
The company signed a contract in September to charter out four of its new reefer vessels to a subsidiary of Fresh Del Monte for ten years.
Star has now fixed long term charters for all 12 ships in its newbuilding program, of which the remaining two will be delivered in the first half of 2010.
The reefer market was slammed by the global economic downturn with cargo volumes falling on key trades through 2009. Banana imports to the European Union and the United States fell by 6 percent and 12 percent respectively up to August and shipments to Russia decreased by 6 percent during the period.
The frozen chicken trade from the United States to Russia decreased to 750,000 metric tons from 1 million metric tons in 2008.
Poor climate conditions in Central America had a negative impact with shortages of fruit compounded by low selling prices resulting in less spot market demand in traditional markets like the eastern Mediterranean.
Ocean container carriers also moved into the reefer market to compensate for lower box cargoes, Star said.
As a result, average spot market rates for larger reefer vessels slumped 46 percent from 2008 levels.
Spot market rates remain below ship operating expenses, Star said. "It is furthermore expected that the container industry will continue to target the reefer market and offer their services at unsustainably low rates."
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