Eimskip 'follows the fish' into new markets and nets strong third-quarter results

© Johann Ragnarsson

Reefer shipping line Eimskip continued to enjoy a strong 2016 in the third quarter, bolstering recent acquisitions aimed at expanding its global freight forwarding activity.

The Iceland-based company saw €134m in revenue, up 3.4% year-on-year, while net Q3 earnings increased by 10.7%, to €9.4m.

Eimskip’s transported volumes in its core North Atlantic market grew by 6.8%, thanks to growth in Iceland, the Faroe Islands and Norway.

Volumes from forwarding services grew by 4.7% in the quarter, but revenue was down 3.8% to €34.7m, due to lower Asia-Europe freight rates.

This month Eimskip announced the acquisition of Norwegian shipping and logistics company Nor Lines in a €15m deal, the 102-year-old company’s third logistics acquisition in two years, after Rotterdam-based forwarders Jac Meisner in January 2015 and Extraco Internationale Expedite in October.

“It remains our intention to grow organically and through strategic accretive acquisitions to increase shareholder value. We continue to evaluate additional acquisitions and vessel investments on an ongoing basis and are currently working on a few options,” said Eimskip Group chief executive Gylfi Sigfusson.

Mr Sigfusson told The Coolstar its strategy was to “follow the fish” to Asia and other fast-developing emerging markets where per capita fish consumption is expected to sky-rocket.

“I believe that the intra-Asia business has the biggest potential for growth at the moment, and also the opening of the new markets in Africa and South America. The purchasing power of the fast-growing middle class in these countries is driving the growth,” said Mr Sigfusson.

He added: “We didn‘t have much infrastructure in these countries so we needed to set up our freight forwarding services in Asia if we wanted to follow the fish and our customer needs into new markets.”

In the North Atlantic, the Nor Lines acquisition will add five vessels to Eimskip’s seven side-loaded reefer ships that operate between Norway, the Netherlands and the UK.

Eimskip is widening its core business of frozen seafood to include fresh fish such as haddock, cod and salmon.

“Today our North Atlantic market is much more aware of the need to get higher yield for their products so we are moving much more valuable products,” Mr Sigfusson explained.

As an example, he said, Eimskip had been creative in its approach to transporting fresh salmon from the Faroe Islands to New York and Shanghai.

“The salmon harvested on Friday goes straight into our trucks, shipped on our vessels to England and Scotland to then be trucked to various airports. That product is on sushi and sashimi plates in New York in four days and in Shanghai in five days because of the time difference.”

He said in addition to fresh fish, Eimskip was adding fruits, vegetables, juices and meat to its cargo portfolio in a bid to develop “new commodities and new tradelanes to serve new customers”.

“To gain share in these new commodities we need to focus on external growth by investing in well recognised freight forwarding companies that are specialised in different trade lanes or commodities that we are not so familiar with,” he added.

Discussing the aggressive moves by large container carriers to capture global reefer volumes, Mr Sigfusson said that while there had been a switch of interest from dry to reefer cargo over recent years, current low freight rates were having an impact.

“The price difference in the Asia trade between a reefer and a dry container is no longer there, although the equipment and maintenance of the reefers is much more costly.

“Therefore we see that the interest of the deepsea container lines is not what it was.”