Bahri chemical transportation improves significantly: CEO

Ahmed Alsubaey, CEO of National Shipping Company of Saudi Arabia (Bahri)

The earnings of National Shipping Company of Saudi Arabia (Bahri) are affected by global transportation prices, which are linked to and impacted by the global economic conditions, CEO Ahmed Alsubaey told Argaam.

Bahri achieved exceptional performance in 2023 and ended the year with strong results, as its net profit increased by 55% year-on-year (YoY), Alsubaey said.

He noted that Bahri hopes prices to remain unchanged in the coming period, as prices were in general good during 2023, which helped the company achieve a strong profit margin.

The chemical transportation segment is witnessing a significant improvement during this period, the CEO noted.

Here are details of the interview:

Q: Bahri's earnings fell to SAR 401.2 million in Q4 2023, compared to SAR 578.1 million a year earlier. How do you see such results?

A: Bahri's earnings are affected by global transportation prices, which are linked to and affected by the global economic conditions, as oil transportation prices were lower in the last quarter of 2023 compared with the year before. However, when looking at 2023, the company's performance was exceptional, as its net profit increased by 55% YoY.

Q: How do you evaluate the performance of the oil transportation and chemical transportation segments in Q4 2023 compared to Q4 2022?

A: The oil transportation prices were lower in Q4 2023 compared to the same period of 2022. As for the operational performance of the chemical transportation segment, it has improved significantly, thanks to the company’s efforts to utilize its fleet and boost operations, which coincided with an increase in global transportation prices during the three-month period. Moreover, the chemical transportation segment witnessed significant improvement during Q4 2023, thanks to economic diversification and the emergence of alternative energy sources.

Q: How do you evaluate demand for gas transportation to regional and global markets in Q4 2023?

A: The evaluation of demand for transporting gas to regional and global markets depends on several factors, including the global economy, energy demand, and technological developments. In recent years, the energy sector has witnessed a significant shift towards using natural gas as an alternative energy source. Therefore, demand for natural gas is on the rise in many regional and global markets.

Q: What is the company’s current fleet size?

A: Bahri’s fleet comprises 98 vessels. It owns 88, while 10 are leased.

Q: What about the current operating rates? What are your expectations for the coming period?

A: Bahri showed outstanding performance in 2023, posting a strong set of results. Compared to 2022, net profit grew by 55%. The average Time Charter Equivalent (TCE) rates reported robust profit throughout the year. Moreover, Bahri’s team worked to enhance the fleet efficiency and achieved many positive results for the group. The management’s decision to introduce IMO2 MR chemical tankers came at the right time as it helped the group meet higher global demand for energy-saving vessels. Additionally, political turmoil in Eastern Europe increased demand. Bahri aimed to improve operating rates, which are deemed one of the best rates recently. This was accompanied by better shipping rates.

Q: How do you evaluate global transportation and shipping rates in Q4 2023? How do you see interest rates in the coming period?

A: Overall, transportation rates are largely affected by the current global economic and political conditions. No one can predict the future. We always aim to maintain the same rates. In 2023, rates were at a good level that helped Bahri achieve strong profit margins and solid financial results.

Q: Was Bahri affected by the Red Sea crisis?

A: Bahri has earlier experienced similar conditions. It coordinates with competent authorities to ensure no delays or disruptions in transportation. Bahri is the Kingdom’s national carrier, thus it should maintain smooth logistics services despite hurdles.

Q: How do you see the company’s performance and demand in Q1 2024?

A: Bahri always works to optimally benefit from its huge fleet. It is hard to predict any economic or political events that impact transportation rates, but we aim to improve performance and cut costs.