Photo: Image courtesy: GOGL

Golden Ocean joins Getting to Zero Coalition

Dry bulk shipping major Golden Ocean Group Limited (GOGL) has become a member of the Getting to Zero Coalition, a powerful industry alliance committed to accelerating maritime shipping’s decarbonization.

The ambition of the coalition, which has over 110 company members, is to have commercially viable zero-emission vessels (ZEVs) operating along deep-sea trade routes by 2030, supported by the necessary infrastructure for scalable zero-carbon energy sources including production, distribution, storage, and bunkering.

The coalition members are promoting cooperation among industry bodies and stakeholders in developing zero energy sources and making deep-sea ZEVs and infrastructure/supply chains commercially viable by 2030.

GOGL said in its Q2 report that the decision was in line with its focus on “enhancing its commitment to environmental, social and governance matters.”

“We believe that global warming is a matter that concerns all of us across countries and industries and that shipping must lift it’s part of the responsibility.

“No single company or person can do it alone, wherefore it comes natural for us to join forces with others who share our ambitions. We want to be part of shaping the future rather than an observer,” Ulrik Andersen, Chief Executive Officer, said in a comment when approached by Offshore Energy-Green Marine.

When asked about the best strategy to transition the dry bulk sector to a zero-emission future, Andersen said answering that question was the main driver behind joining the coalition.

“We hope to find the answer in the years to come. What I can say is that it will require cooperation, innovation, capital and effort, but where there is will there is a way,” he added.

The company posted a net loss of $41.3 million in the second quarter of 2020, narrowing the loss from the previous quarter which stood at $160.8 million.

The recovery was ascribed to higher freight rates throughout the second quarter of 2020 as global trade began to recover from the severe disruption brought about by the COVID-19 pandemic.

As disclosed, GOGL reported a loss from associated companies of $5.2 million in the second quarter of 2020, mainly related to loss of $5.6 million from its investments in SwissMarine and a $0.3 million gain from its investments in TFG Marine. The company acquired a 10% ownership interest in TFG Marine, a bunkering joint venture with Trafigura and Frontline, in January 2020.

Commenting on the drybulk market, GOGL said that based on the current orderbook, the dry bulk fleet will grow by 4.7% in 2020, before taking into account the possibility of vessel delivery delays and incremental fleet demolition.

In 2021, gross fleet growth is expected to decline to a maximum of 3.7% and is expected to decline further to 0.9% in 2022, assuming all vessels are delivered on schedule, no additional orders are placed and no vessels are demolished.

In the first six months of 2020, 30 Capesize vessels were scrapped. This compares to the 29 Capesize vessels scrapped during all of 2019 and 18 Capesize vessels scrapped in 2018.

Additionally, Vale has indicated that it has decided to phase out 25 very large ore carriers from its fleet, either through early termination or amendments of contracts.

As the traditional ship-breaking countries resume operations with the easing of COVID-19 related lock-downs, it is likely that vessel demolitions will remain elevated, particularly for older, less fuel-efficient vessels.

“While we believe that the recent improvement in rates reflects the diminishing impact of COVID-19 on the underlying demand for dry bulk commodities, uncertainty persists in the near term. We have therefore increased our charter coverage for the balance of 2020, although we maintain enough spot exposure to meaningfully participate in the strong rate environment expected for the remainder of the year. This balanced commercial approach will ensure healthy continued cash flows and a corresponding increase in our liquidity,” Andersen commented.

Andersen added that the significant one-off capital expenditures related to scrubber installations and the non-cash impairments that impacted the company’s results in the first half of the year have been completed paving way for better cash-flow in the second part of the ear.

Namely, GOGL completed the final eight of 23 planned installations of exhaust gas cleaning systems on the company’s Capesize ships as part of its efforts to comply with the IMO 2020 sulphur cap.

The company’s fleet consists of 78 vessels, with an aggregate capacity of approximately 10.8 million dwt.

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