Mingling with other news reports, this one, as mentioned in JS Global affiliates with ProPakistani, is about how the Pakistan National Shipping Corporation-PNSC is feeding the fire in becoming better mariners by acquiring new Aframax.
As a leader in the marine industry in terms of oceans of transportation, PNSC has a range of services that fulfill all the requirements the country receives with varying shipping demands. In a more recent corporate briefing, the company immersed in the financial position of the company out of FY 24 and hopes for the future.
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For FY24, PNSC consolidated topline was of Rs. 46 billion, which shows a Year-on-Year decline of 15 per cent due to a sharp drop-in dry cargo by 48 percent on account of depreciated average charter rates; Slot charter operation shrank by 33 percent YoY on fewer government consignments wherein one segment of the national trade didn’t yield anything for TCP, of which Rs. 2.8 billion was accrued last. The overall effect of these issues was that revenue from liquid cargo remained flat at Rs. 40 billion.
Other income, down 17 percent YoY, has taken hits from the nonrealization of vessel disposal gains (approximately Rs. 3.3 billion in FY23) and the absence of exchange gains with a stable currency. Management, however, expects demand to boost as supported by a dry-bulk segment and new break-bulk government business orders for 2023.
To replace four of its five Aframax vessels, which are aged 18-19, PNSC has called international tenders. The received bids from the UK, China, and other shipyards are expected to be finalized by the end of CY24. Under the Prices Companies and State-Owned Enterprises Act, 2023, PNSC is now required to formulate its procurement policies in conformity with international practice in the shipping industry. Final Approval from the federal cabinet states so.
The vessels built afresh will meet the emission reduction targets of the International Maritime Organization; for instance, a reduction of 20 percent by 2030, 70 percent emission reduction by 2040, and zero emissions by 2050. These tankers will possess internally coated tanks that facilitate dirty and clean liquid transportation, thereby broadening market acceptance.
PNSC plans to fund the acquisition with both equity and debt, with around 80 percent of the project cost predicted to come from a debt facility. Cost estimates for brand-new or under-construction Aframax tankers, with agreements for early deliveries, are around $85 million each, while new-built contracts range from $73 million to $75 million. Vessels more than five years old may not be acquired per the regulation. Currently, the price of used Aframax is about $12 million, with a scrap value of $7-10 million.
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The company also intends to continue with dry-docking activities with five vessels to be serviced for maintenance. An oil tanker will be inactive for 40–45 days while four dry bulk vessels will undergo dry docking for 25–35 days.
The present fleet consists of Aframax vessels aged 18–19 years, LR-1s 12 years old, and bulk carriers built 16–17 years ago. The charter rates are between $30,000 and $35,000 a day per vessel for Aframax tankers, $10,000-11,000 a ton/day for LR-1s, and $11,000 a day for bulk carriers.
Things are still looking good for Aframax operations because refinery product cargoes will always keep their ends static. The dry bulk segment has done very well against budget on the backs of record exports of iron ore, coal, and minor bulk commodities. Demand for tankers is expected to rise due to a favorable freight market scenario anticipated to prevail over the next three years because of limited tonnage availability.