Eimskip’s operations are divided into two principal market segments: Liner services in the North Atlantic and international forwarding services.
- The core of the Company’s operations
- Eimskip’s home market includes Newfoundland and Labrador, Iceland, the Faroe Islands and Norway
- 20 vessels in operation
- Terminal operations
- Chilled and cold storage facilities
- Trucking and distribution
- Air freight services
- Agency services
- Main focus on reefer forwarding; dry cargo forwarding is growing
- Efficient system based on a network of 65 own offices in 20 countries across four continents
- Cooperation between Eimskip’s own offices, its worldwide network of associates and international deep-sea lines
In 2018, 65.2% of Eimskip’s revenue came from liner services and 34.8% from forwarding services. The division of EBITDA in 2018 was as follows: 71.1% from liner services and 28.9% from forwarding services. The geographical division of revenue was unchanged in 2018 where Iceland related business contributed 48.1% of total revenue.
REVENUE BY BUSINESS SEGMENT
EBITDA BY BUSINESS SEGMENT
DEVELOPMENT OF EBITDA BY BUSINESS SEGMENT
GEOGRAPHICAL SPLIT OF REVENUE
Eimskip’s liner services are the core of the Company’s operations. Liner services operate a dynamic sailing system in the North Atlantic, with 20 vessels currently in operation. The Company’s home market includes Newfoundland and Labrador, Iceland, the Faroe Islands and Norway. The liner services also offer short-sea services in Europe and North America, Trans-Atlantic services and bulk transport. Liner services include terminal operations, chilled and cold storage facilities, warehousing, trucking and distribution, airfreight services and agency services.
Liner services revenue for the year 2018 amounted to EUR 449.2 million, an increase of 2.5% from 2017. EBITDA from the liner services amounted to EUR 35.0 million compared to EUR 39.5 million in the previous year. In 2018, liner services accounted for 65.2% of the Company’s revenue and 71.1% of its EBITDA.
Transported volume in Eimskip’s liner services in 2018 grew by 4.2% from the previous year, mainly due to growth in exported volume from Iceland and in Trans-Atlantic volumes, while there was a reduction in volume in the reefer liner services in Norway. In November 2017, the Company introduced weekly services on its Green line by adding a new vessel. Building up new volume took more time than expected affecting results of the liner services but volume growth in Trans-Atlantic services was strong in second half of the year 2018.
The graph to the left below shows the gradual increase in transported volume in recent years in the Company’s liner services. The compound annual growth rate (CAGR) for the years 2014 to 2018 was 4%. The volume index on the right axis is based on the 2010 volume as 100. The graph below on the right shows that 71% of the liner services volume relates to Iceland.
LINER SERVICES VOLUME
Changes from previous year
LINER SERVICES VOLUME 2018
Iceland, Faroe Islands, Norway and Trans-Atlantic
Eimskip has defined its home market as the North Atlantic, stretching from the east coast of North America to the west and north coasts of Norway and embracing Newfoundland and Labrador, Iceland, the Faroe Islands and Norway. These countries are all niche market areas, rich in natural resources and have small populations.
Seafood represents a substantial part of total cargo in the Company’s home market.
Eimskip constantly re-evaluates its sailing system and vessel fleet with the aim of optimizing its operational efficiency.
In 2017, Eimskip invested in its container liner services by making changes to its sailing system by adding a third vessel to the Green Line and reached its goal of weekly service.
During 2018, the Company continued its weekly sailing system and placed more emphasis on building up Trans-Atlantic volume and short-sea volume between Halifax, Nova Scotia and Portland, Maine in the US.
In November 2018, the Company changed its sailing system for the Blue Line when Godafoss and Dettifoss started its direct call from Reykjavík to Rotterdam and stopped calling Reydarfjördur and Torshavn in the Faroe Islands. Changes were also made to the Red Line where Pollux and Persus started calling at Reydarfjördur with a connection to the Yellow Line in the Faroe Islands.
The operation of the Orange Line in Norway faced some challenges during the year 2018 with a volume decrease and less profitability. Therefore the Company made changes to its sailing system in the beginning of 2019. The Gray Line was separated into two lines: The Gray Line which serves the Icelandic costal market biweekly and the Purple Line which serves the market between the Faroe Islands and Scotland. The vessel Selfoss was moved from the Green Line to the Gray Line and Lomur was moved from the Gray Line to the Green Line. The vessel Svartfoss was then moved from the Orange Line to the Purple Line and the vessel Blikur was offhired. The Orange Line is now serving with three vessels instead of four during the year 2018.
The Blue Line offers weekly services from Iceland to the Netherlands, Germany and Denmark and then back to the Faroe Islands and Iceland. The vessels serving on the Blue Line are Godafoss and Laxfoss.
The Yellow Line offers weekly services from Iceland to the Faroe Islands, England and the Netherlands and then back to Iceland. The vessels serving on the Yellow Line are Lagarfoss and Bakkafoss.
The Red Line offers weekly services from Iceland and the Faroe Islands to Denmark, Poland, Norway and Sweden and then back to Iceland. The vessels serving on the Red Line are Pollux and Perseus.
The Gray Line offers weekly services between Iceland, the Faroe Islands, the Netherlands and then back to Iceland. The route calls several ports around the coast of Iceland. The vessel serving on the Gray Line is Selfoss.
The Green Line offers weekly services from Iceland to the east coast of the United States, Nova Scotia and Newfoundland and Labrador and then back to Iceland. Skógafoss, EF Ava and Lomur serve on the Green Line.
The Purple Line created in January 2019 offers weekly services between Faroe Islands and Scotland. The vessel serving on the Purple line is Svartfoss.
The Orange Line offers weekly services from Murmansk in Russia, down the Norwegian coast on its way to the Netherlands, England, Scotland and then back to Norway. The vessels serving on the Orange Line are Holmfoss, Polfoss and Vidfoss.
Six vessels serve ‘Other Operations’ in the North Atlantic. Eimskip’s reefer transportation services are specially focused on the transportation of frozen or chilled seafood and other perishable products in bulk, direct from port to port, in whole or partial loads. These services are carried out by the specialized reefer vessels Langfoss and Stigfoss. Eimskip offers specialized transport for bulk cargo in whole loads or by the needs of the shipper and the consignee each time. The vessel Saxum is used in bulk transport. Finally, the ferry Herjólfur offers regular services between the Westman Islands, off the south coast of Iceland, and Iceland’s mainland, and the ferries Baldur and Særún serve on the west coast of Iceland.
SAILING SYSTEM IN THE NORTH ATLANTIC
Eimskip currently operates twenty vessels in the North Atlantic, of which twelve are own vessels and eight are chartered. Fourteen of the vessels are used in scheduled liner services on seven different sailing routes, thereof ten container vessels and four reefer vessels. In addition, two reefer vessels offer spot services, one is in bulk services and three are ferries operated in Iceland.
The vessels are highly competitive in terms of their size, cranes, reefer plugs, shallow draft and manoeuvring capabilities to enter narrow ports.
Eimskip and Royal Arctic Line, the national carrier of Greenland, signed a cooperation agreement regarding potential sharing of capacity in January 2017. The potential cooperation is subject to confirmation from the Icelandic Competition Authority. A contract was signed with CSTC and Guangzhou Wenchong Shipyard Co., Ltd. in China on building two 2,150 TEU ice class Polar Code container vessels for Eimskip, with expected delivery in the second half of 2019. The vessels are built in line with environmental standards and designed to be fuel-efficient.
The two new vessels will be named Bruarfoss and Dettifoss. The new Bruarfoss will be the Company’s sixth vessel with that name but the first Bruarfoss was built in Denmark in 1927. Dettifoss will also be the sixth vessel with that name. The first Dettifoss was built in Denmark in 1930. The name of last Dettifoss was changed in March 2019 to Laxfoss.
EF AvaChartered Vessel
OPERATIONS AND OPERATING ASSETS
The Company operates terminals in 17 locations in five countries: eight in Iceland, three in the Faroe Islands and three in Norway, two in Canada and one in the USA.
Eimskip owns or operates 16 chilled and cold storage facilities in five countries: Six in Iceland, three in Norway, two in each of the Faroe Islands, Newfoundland and Labrador and one in China. Eimskip also operates 29 warehouses for dry cargo in nine countries: 14 in Iceland, five in the USA, three in the Faroe Islands, two in the UK and one each in Norway, Sweden, Denmark, the Netherlands and Vietnam.
In 2018, Eimskip Norway purchased 51% of the shares in the Company Tromsoterminalen AS which operates a cold store in Tromso. The Company also purchased 49% shares in the Company Tromsoterminalen Eiendom AS which is currently building a new 20,000 ton cold store in Tromso.
The Company’s container fleet currently consists of around 29,990 TEU. Trucking and distribution services are operated in Iceland, the Faroe Islands, Denmark, the Netherlands and the USA. The Company operates 417 container cranes and forklifts and 792 trucks, vans and trailers.
OPERATIONS AND OPERATING ASSETS
Eimskip has a strong position in the Icelandic market and is known for its excellent service. The Company has a broad customer base and embraces a range of different needs. The Company must continue to offer a wide range of solutions to meet customer requirements and to serve the general public. Streamlining and increased automation must also continue so that the Company remains competitive. Digitalization and transparency are also key elements in the continued development of our services.
Digitalization is affecting and changing the shipping industry. Eimskip will continue to adapt and develop in line with customers’ needs in a fast changing technical environment where self-service has become more important. The need to provide easy, fast and reliable transportation services and information has been the main requirement in recent years. Every link in the transportation chain has to work flawlessly so that the Company’s front-line employees are able to provide outstanding services. Eimskip’s focus on information technology, synergy and the implementation of Robotic Process Automation (RPA) will play a vital role in our journey towards service excellence in the future.
Eimskip‘s service portal is constantly being developed. The portal enables customers to send in their booking requests and service requests, access invoices and necessary documents online and monitor their orders.
Eimskip’s service portfolio also includes the eBOX, a clear and simple, user-friendly solution for smaller shipments from Europe and North America to Iceland. Customers can calculate the price of transportation door-to-door on the web through the eBOX and the Company’s transportation system ensures that the shipment arrives in Iceland via the first available vessel.
Eimskip is a niche player in forwarding services. The forwarding services are a network of the Company’s own offices and associates worldwide, offering a full range of transportation and logistics services. They include international reefer forwarding and dry cargo forwarding. The main emphasis has been on reefer forwarding, but dry cargo forwarding has grown in recent years.
Forwarding services are transportation solutions that are outside the Company’s own operating system but they nevertheless support each other. The international forwarding market is diverse and very competitive. Eimskip has created a global service network in cooperation with various transportation companies all over the world to answer customer demand. This service network is constantly evolving and attracting new customers. Eimskip has built valuable relationships and acquired extensive knowhow in the reefer forwarding trade over the years, both through its other operations and through the acquisition of specialized forwarding companies. The Company focuses on selling forwarding services by utilizing its global network of own offices, associates and international deep-sea lines, and is a specialist in the transportation of temperature-controlled cargo, where seafood products play an important role. The Company also offers forwarding of dry cargo through various logistics solutions worldwide.
Eimskip has been expanding its logistics network in Asia. It has since 2014 been a 30% partner in a joint venture with the Port Authority in Qingdao, China, operating a 50,000-ton cold storage facility in Qingdao. The Port Authority’s selection of Eimskip as a partner is an important factor in strengthening the facility’s operation and creating new opportunities.
Eimskip started its forwarding services in Asia by opening an office in Qingdao, China, in 2004, starting out with 4,000 TEU. The Company currently operates eight offices in Asia. For comparison, the forwarding services of the Group handled about 226,800 TEU in 2018.
Cargo volume in international forwarding services is dependent on seaborne perishable reefer cargoes in which fish products play the most important role. The volume in reefer forwarding is more stable than in dry cargo forwarding due to reefer cargo being less dependent on economic fluctuations, since consumption of food products is usually more stable than other products. Other perishable cargoes are meat, fruit and vegetables.
Forwarding services faced challenges in markets in Europe and Africa, which affected the results in 2018. Revenue amounted to EUR 239.9 million, an increase of 6.4% from the previous year. EBITDA from the forwarding services was EUR 14.2 million, a decrease of EUR 3.4 million or 19.3% from 2017. Forwarding services accounted for 34.8% of the Company’s revenue in 2018 and 28.9% of its EBITDA.
Transported volume in Eimskip’s forwarding services in 2018, including reefer forwarding and dry cargo forwarding, increased by 4.3% from the previous year. There was strong growth in dry forwarding but reefer forwarding decreased marginally.
The graph to the left below shows that transported volume in the Company’s forwarding services has gradually been increasing in recent years. The compound annual growth rate (CAGR) for the years 2014 to 2018 was 12.9%. The volume index on the right axis is based on the 2010 volume as 100. The graph below on the right shows that 71% forwarding services volume is reefer cargo.
FORWARDING SERVICES VOLUME
Changes from previous year
FORWARDING SERVICES VOLUME
Reefer and dry cargo forwarding
Eimskip’s global network currently consists of approximately 1,800 employees in 65 offices across 20 countries in Europe, the Americas, Asia and Africa and a worldwide network of associates.