Norwegian Interests Retain Position Within Tanker Shipping Whilst Air Freight Sector Develops

Historically Norway has always had a position in terms of global shipping status belied by the country’s size and that tradition continues to this day. In the past couple of weeks we have witnessed another major move from an oil tanker tycoon native to the country and the birth of a new company linked to the air freight sector.
John Fredriksen, now a Cypriot citizen but still regarded as Norway’s richest man, has reportedly made some serious purchases to reinforce one of his company’s tanker fleet. When he established Frontline 2012 as a subsidiary of Frontline, which boasts one of the biggest crude carrier fleets in the world, it’s policy statement referred to ‘the ownership and operation of modern and fuel-efficient tonnage’. Now it appears that he has been true to his word as last week Frontline 2012 apparently placed orders for new build vessels specifically designed to reduce fuel costs dramatically.
Fredriksen is of course no novice when it comes to grand gestures and betting heavily on his predictions. Reports say he has as many as fifty three vessels on order, all particularly frugal in terms of fuel use, a policy being adopted by other major carriers. The economics of such a move is self-evident when one examines the running costs of a VLCC, with the new ships cutting as much as 30% from the fuel bill and that cost in turn representing up to three quarters of overall running costs an old, expensive to run, fleet in times which, when vessel capacity exceeds demand significantly, will leave an operators older ships literally dead in the water.
Frontline clearly understands that within its operating sector cost is the one all important factor. Originally listed on the Stockholm exchange before domiciling in Bermuda its ships virtually all sail under flags of convenience manned by international crews who are perhaps more easily satisfied than sailors of some nations. The company has nimbly moved through the necessary negotiations of ordering and cancelling new builds and charter agreements since its formation whilst forming Frontline 2012 as a subsidiary and investing in other sectors such as offshore to become the force it is today.
Meanwhile low cost airline, Norwegian Air Shuttle ASA, which now describes itself as a Nordic as opposed to a Norwegian group, has established a cargo company that will coordinate and utilise the capacity of the airline’s route network. The new company, Norwegian Cargo AS, will administer the various international markets through a wide network of General Sales Agents (GSA) agreements. The market in the Nordic countries will be managed directly by the company, which also enables the possibility for more direct agreements. Bjørn Erik Barman-Jenssen, Director Ground Operation & In-flight Services said:
“With Norwegian's continual growth and the launch of flights to the United States and Thailand, this is the right time to establish a separate entity within the company to maintain and develop the transportation of goods and to ensure optimal utilization of the available cargo capacity.”
Today, Norwegian only transports cargo within Scandinavia. The establishment of Norwegian Cargo means that Norwegian’s entire route network with over 120 destinations will be available for customers who need to transport goods. Norwegian currently operates 73 aircraft on 330 routes to 120 destinations and employs approximately 3,000 people. Norwegian's fleet has an average age of 4.6 years and the company currently has 280 aircraft on order.
Source: Handy Shipping Guide