Bahri CEO sees better earnings as marine freights rise in 2019

The National Shipping Company of Saudi Arabia’s (Bahri) results will improve as sea freight rates are expected to increase amid higher oil prices, Bahri’s CEO Abdullah Al-Dubaikhi told Argaam in an interview.

The change in rates will reflect on Bahri’s profitability within one and a half to two months, he said, adding that the recently announced prices will positively impact the company by mid-December or early 2019.

Cargo volumes in the first nine months of 2018 were close to that of a year earlier. Oil and petrochemical shipments are expected to increase in 2019, he said on the sidelines of Saudi National Security & Risk Prevention Expo in Riyadh.

Bahri’s fleet has 92 ships, he said, adding that in the future, the company’s vessels will be built by its 20-percent owned affiliate International Maritime Industries in Ras Al Khair.

The Tadawul-listed shipping company seeks to expand its fleet in order to replace its 20-25 year old carriers and meet rising demand. Five more ships will be bought during the first quarter of 2019, he said.

Commenting on Bahri’s expansion plans, Al-Dubaikhi said its 2019-2020 plan will be revealed by the end of December. The company’s planned fleet expansion depends on business projections, he added.

Meanwhile, Bahri is also expanding its logistics and remotely controlled surveillance boats, which will positively impact the firm’s future results.

Discussing the firm’s decision to call off negotiations to sell part of its 30.3 percent stake in Petredec Limited, Al-Dubaikhi said: “We didn’t reach an agreement that would satisfy all parties, so we preferred to keep our stake intact.”

As for Bahri’s receivables, mostly at government agencies, he said that the majority will be collected before the end of this year.

Meanwhile, Al-Dubaikhi said that the company is working on reducing sulfur emissions from ship fuel from its current 3.5 percent to 0.5 percent by 2020, in compliance with the International Maritime Organization’s (IMO) regulations.

New IMO regulations will go into effect on Jan. 1, 2020, limiting sulfur in fuel oil used on board ships. This is in order to reduce the amount of sulfur oxides emanating from ships and should have “major health and environmental benefits for the world,” according to the IMO’s website.

Bahri has resorted to a cost-effective method by installing sulfur reducing equipment, instead of using expensive low sulfur marine fuel, Al-Dubaikhi said.

The new equipment will have minimal impact on the firm’s expenses, he added, noting that any rise in shipping or fuel costs will hike shipping prices.