The period tanker shipping is currently going through is showing in a brutal way how important timing and positioning in the market are for our type of business. One must have respect for the losses and financial challenges that many of the world’s tanker operators are struggling with. But unfortunately, we must go through this period in order to tackle the fundamental imbalance between supply and demand. It is somewhat paradoxical that most of the factors on the demand side are looking very good – while tanker shipping has struggled with freight rates that hardly covered operating costs. The answer to the question of why it is like this is. Too many ships! However, the positive effects of the weak market are that orders for newbuildings are decreasing and, although with less effect, ships are being phased out earlier for reasons of age. In the product tanker segment, the order book in relation to the existing fleet is no longer as alarming. We believe that the product tanker market will slowly and gradually improve from its present level. 2011 will probably be yet another weak year, while in 2012 and, in particular, 2013, there is a good chance of the market achieving a balance. Large opportunities As far as Concordia Maritime is concerned, we see excellent opportunities ahead as the time charters begin to expire. The first charter expires in the summer. In 2013, charters covering half our fleet will have expired. We have so far not made any assessment regarding whether the vessels will be signed to charters or employed in the open market. It would clearly be very interesting to employ the vessels ourselves in the interesting niches and systems our partner Stena Bulk has developed and continues to develop. One example of this is the collaboration with Danish Weco, one of the leading players when it comes to transporting vegetable oils and biofuel. Today, the P-MAX tankers are not classed for these types of cargo but we are working on evaluations including necessary modifications so that they can be approved, a so-called IMO3 classification. We believe that this will be achieved and, if so, we will gradually modify a part of the fleet.

Capacity for further investments

Our financial position and capacity for further investments continue to be stable. New investments must, as always, be preceded by very careful and comprehensive consideration. At present, we are working on a number of interesting projects, which could, at a later point, lead to orders for new tonnage in the product tanker segment. Shipyard prices have fallen about 30 percent from their peak level in 2008. It is possible that they will fall still further. We do not rule out the possibility of acquiring good second-hand tonnage. So far, however, the difference between the price asked by sellers and the price the buyers are willing to pay is too large, but we believe that this gap will shrink as a result of sellers being forced to lower their prices.

Hijacking a growing problem

During the year, the problem of pirates and the hijacking of ships became increasingly severe. The safety of our ships and our crews has, and always has had, the highest priority. We are doing our utmost to protect ourselves and safety procedures have been in place on our ships for many years. As a result of the ISPS Code adopted internationally some years ago, the security requirements in ports have also been tightened up. The whole Indian Ocean is, in principle a risk area. When our vessels pass through this region, comprehensive security assessments are made prior to each individual voyage after which the necessary protective measures are taken based on these assessments.

Focus on safety and quality producing results

It is very gratifying to be able to describe 2010 as a year of good ship operation without any accidents or incidents. This is sometimes taken for granted, but it is the result of a lot of hard work by our crews, from officers to ratings. Our work related to environmental issues continues. It is, of course a question of reducing emissions of particles and other harmful substances. Together with Stena, we are currently working on two very interesting ship projects. The first is the P-MAXair. Here, the objective is to dramatically reduce fuel consumption and thus emissions of harmful substances and particles. A fundamental part of the solution consists of reducing the friction between the ship’s hull and the water by means of air. The second project concerns the development of a somewhat smaller product tanker where the naval architects at Stena Teknik, by refining and improving existing technologies and designs, have succeeded in reducing fuel consumption in a surprising way. Even if a lot remains to be done in this field, it should be noted that shipping in general and tanker shipping in particular is the transport mode that produces the least emissions in relation to the volume of cargo transported. Oil will need to be transported for many years to come. A transport mode that is already environmentally efficient will be developed so as to be even more efficient. Concordia Maritime will be part of this future as a leading company, not in terms of size but in terms of innovation and first class performance.

Thank you

Many thanks to all our employees and partners for a good 2010. A special thanks goes to all the crews on board our ships who work day and night all the year round to ensure that we carry out our task – to provide first class transportation of oil, safely and efficiently, across the oceans. We look forward to an exciting and rewarding 2011.

Gothenburg, March 2011

Hans Norén, President