Danish Shipping Companies Did Well in 2014

Danish shipping companies did well in 2014 despite very difficult market conditions. However, 2015 started off with the lowest freight rates ever recorded and a massive overcapacity in many segments, Danish Shipowners’ Association said.

Positive economic trends emerged in Europe – the primary region for Danish shipping companies’ trade – in the beginning of 2015.

DSA’s report revealed that low freight rates have meant that Danish shipping companies in several cases have not renewed or even ended their time charter agreements of vessels. This has led to a decline in the total tonnage operated from Denmark, which is an indication that Danish shipping companies are adapting to the new economic realities and are maximizing their operating results.

Nevertheless, Denmark is still the 8th largest shipping nation in the world measured by operated tonnage and controls 4.11 % of the total merchant fleet across segments.

Compared to Norway and Sweden, the commercial fleet in Denmark has developed very positively, in relative terms, the association said. This is especially due to the net payment scheme in DIS, which ensures the Danish shipping companies competitive conditions in international terms. This positive trend is also true in a larger international perspective, according to the association’s report.

The foreign currency earnings in 2014 set a new record with 205 billion DKK, which was an increase of apx. 2 % compared to 2013. Foreign currency earnings are affected by three factors: cargo volumes, freight rates and the exchange rate of the US dollar.

International trade increased by 3.4% in 2014 according to the IMF, but the low freight rates held back the earnings for the shipping companies.

Hence, as indicated by the association, the strong dollar was good news for Danish shipping companies, as most shipments are settled in USD. The strong dollar did not really manifest until the second half of 2014, but has carried its momentum into 2015. Shipping companies are expected to benefit from the strong US dollar throughout 2015.

The IMF predicts that international trade will grow 3.7% in 2015, which bodes well for the Danish shipping exports in 2015.