Almost 7 years in a dry bulk pool –what is it giving?
A Baumarine case study with M Pallonji Logistics Pvt Ltd
Image: MV MP Kamsarmax 1, joined Baumarine Pool ex-yard in February 2017
In the ever-evolving world of maritime transportation, ship pooling has remained a popular and effective strategy for shipowners. To hear how the Baumarine by MaruKlav pool is still performing amidst the challenges and uncertainties faced by the industry, we spoke with long-term partner M Pallonji Logistics Pvt Ltd on where they continue to see value after their almost seven years with us:
Capitalizing on market opportunities
One of the primary advantages of being part of a shipping pool is the access to market intelligence and expertise. When asked for an example, Pattabiraman S, General Manager at M Pallonji Shipping says, “Baumarine proved again their value this April 2023 when they informed us of a sudden surge in the freight forward agreement (FFA) market. They offered a fixed rate indication for three months, which proved to be significantly higher than prevailing market levels.”
By hedging their position during the market peaks, M Pallonji Logistics stands to gain approximately a $778,000 upside in the three-month deal. As regular users of this fixed rate conversion service, the example illustrates how a pool's ability to monitor market trends closely and provide timely information often results in discovering new, profitable, opportunities.
Ignacio Pizarro, Global Head of Partner Relations at Baumarine by MaruKlav adds, “we have been offering this fixed rate conversion service believing that by profiting through hedging, owners can build more security in this increasing volatile industry, and make the uncertain a bit more certain.”
Performance-based rewards
Shipowners who prioritize the technical and maintenance aspects of their vessels are consistently rewarded within a pool, with Baumarine offering ‘quarterly redistributions’ based on the actual fleet performance. This adjustment is then incorporated into any agreed fixed rate while trading in the pool, further benefiting the members.
Reflecting on this, Pattabi states that M Pallonji received a quarterly adjustment of +3.6% in Q1 2023, stating, "these performance-based rewards incentivize shipowners to diligently maintain their vessels while increasing their profitability within the pool."
Collaborative decision-making
Effective collaboration and open communication are essential for the success of any pooling arrangement. M Pallonji emphasizes the value they derive from regular update meetings with the pool's teams. Their suggestions are taken into account when making decisions to improve the pool's overall performance and strengthen the group of shipowners.
This inclusive approach fosters a sense of ownership and involvement among the members, ensuring their interests are considered in the decision-making process. Pizarro explains, “we strive to make a big difference for our exclusive group of shipowners and believe that by joining forces and economies of scale we became stronger, and smarter together.”
Bringing digital solutions into the fold
The advent of digital technologies has transformed various industries, including maritime transportation. In line with this trend, Baumarine has recently provided its members with access to a range of Macro Dry Bulk insights through their freight decision-making digital platform Market Manager by Klaveness.
This platform will enable M Pallonji to understand global fleet developments and some key drivers affecting the dry bulk market, with additional value features to be added soon.
Conclusion
The successful partnership between Baumarine and M Pallonji provides a good example of the continued value that pooling arrangements offer to shipowners in today’s market, allowing them to remain competitive in the industry.
Michael Jørgensen, Managing Director of MaruKlav concludes, "volatility and complexity are poised to stay, especially with the introduction of CII and EU ETS requirements, and the potential implementation of a global carbon tax. Ensuring our members are equipped with the knowledge and resources to navigate these challenging times while delivering strong earnings to their vessels is our top priority."
About Baumarine by MaruKlav
Baumarine by MaruKlav is a Dry Cargo Panamax pool serving owners globally through in-depth market and industry knowledge run by the joint managers Marubeni and Klaveness. Through close collaboration, scale and use of data and analytics we provide a viable alternative to ship owners in a market where charterers are often taking the lead in terms of timing the next fixture. Volatility in the market looks certain to stay and we give owners the control back.