A crew member checks lashing chains on board the RoRo vessel Mont Ventoux.

Stena RoRo

CONTINUED HIGH ACTIVITY AND FOUR NEW VESSELS

Stena RoRo provides vessels, innovative solutions and project management. Its customers are operators and shipping companies around the world. The company’s expertise, dedication and financial resources create customer value, growth and profitability, and make it an attractive place to work.

Stena RoRo has maintained a high level of activity in recent years. The industry’s economic challenges following the Lehman Brothers crash have created buying opportunities at favourable prices – especially in relation to current newbuilding prices.

Stena RoRo purchased four vessels in 2013. Two of them, Stena Alegra and Stena Egeria, were purchased after they had been laid up for an extended period and since then have been refurbished in shipyards. This type of demanding deal works because of Stena RoRo’s technical, commercial and financial expertise. At the end of 2013, Stena Alegra was employed in New Zealand, while Stena Egeria was still under refurbishment in China.

During the year, Stena RoRo acquired two additional RoPax vessels, Trinacria and Partenope, which were chartered back to the seller. Stena RoRo is in a very active phase and, in addition to the four above-mentioned vessels, has assumed commercial and technical responsibility for five RoRo vessels from Stena Line since April 2012.

In late 2012, Stena RoRo was awarded a contract by Mercy Ships to design the world’s largest civilian hospital ship. Mercy Ships is an international charity organisation that currently operates one older hospital ship staffed by voluntary medical personnel from around the world. The vessel has been operated for several years in some of Africa’s poorest countries. In December 2013, Mercy Ships placed an order for the new ship at the Xingang Shipyard in China. A contract was also signed between Stena RoRo and Mercy Ships where Stena RoRo will be responsible for management and site supervision.

Stena Baltica, renamed SNAV Adriatico, was delivered at the beginning of the year to the Italian shipping company SNAV, which operates ferry traffic between Italy and Croatia. The contract with SNAV is a six year bareboat charter with a final purchase obligation.

Market development

The recent market slowdown has eased. The RoPax segment is showing signs of improvement. Charter rates have rebounded, and we are seeing a balance between supply and demand.

The RoRo market, on the other hand, is not yet seeing any improvement. Cargo volumes are keeping pace with economic conditions in general. On the supply side, a large number of modern vessels were ordered during the years 2005–2007. When they were delivered, the economy was in considerably worse shape, which pushed smaller and older vessels aside and has led to recycling of a large number of RoRo vessels in the last 2–3 years. One political decision that has prevented speculative newbuilding in the RoPax segment is the European Union sulphur directive. Stricter rules on sulphur emissions will be introduced in so-called Sulphur Emission Control Areas (SECA) in 2015. At this point in time, there is uncertainty which technical solutions should be used for new vessels. Examples include operating on methanol, LNG or treating emissions with scrubbers. Stena continuously evaluates all these alternatives.

Fleet improvements

Efforts continued during the year to further improve vessels according to DNV Triple-E (Environmental and Energy Efficiency Rating Schedule), system for the improvement of environmental performance and energy efficiency. Stena RoRo was the first in the world to introduce the system, on board the Stena Foreteller. Stena RoRo is also working actively to reduce bunker consumption by improving its operational processes and reducing resistance through the water. The latter includes using silicone based marine paints, more efficient propellers, optimised machinery and propulsion systems, and refined hull designs.

CEO Comment

We expect the RoRo market to remain stable in 2014 compared to 2013. The outlook is brighter for the RoPax market, where we are seeing higher rates on contracts renewals. Stena RoRo’s strategy is to work with financially sound customers with specific needs, where we can offer full-service solutions that include design and implementation of newbuildings and refurbishment of vessels and systems.

Our business is to acquire, manage and upgrade vessels. Efficient operation, environmental safety and customised vessels all create value-added solutions, which leads to higher productivity and at a later stage to profitable vessel sales.

Per Westling

CEO Stena RoRo

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