01 | Letter from the CEO
Letter from the CEO
2021 was another year full of many challenges, as the world continued to confront the Covid-19 pandemic. Although it was a year fraught with difficulties and cycles of hope and disappointment, I think we should all be proud of our individual and collective resilience. As for Hafnia, this is especially true. We continue to be indebted to the admirable service of our seafarers – frontline workers who are constantly sacrificing to keep the world moving. Travelling during these times has not been easy, but it is even harder to be away from loved ones when there is so much uncertainty in the world. So please join me in thanking Hafnia’s seafarers, and seafarers around the globe, for the vital service they are providing to the world.
“Future-proofing” through consolidation
Despite the difficulties of 2021, we have a lot to be excited about at Hafnia. The year was full of significant accomplishments: we took advantage of the market downturn to position the company robustly for the future.
Of course, the headline news was the CTI and Scorpio transactions that saw us add 44 modern tankers to our fleet – cementing our position as the world’s leading product and chemical tanker shipping company. These transactions underscore Hafnia’s commitment to grow our platform in order to maximise stakeholder value, and the fact that leading institutional investors are willing to receive Hafnia shares as payment speaks to the strength of Hafnia’s platform.
Consolidation enables us to achieve improved earnings capability through the shipping cycle, especially in the face of volatile markets. The recent transactions immediately enhanced our trading flexibility through the ability to carry both clean petroleum products and chemicals – limiting ballast time by optimising triangulation and offering material cost synergies. All of this ultimately allow us to create a more sustainable and future-proof transportation business. To this end, we still see the need for more consolidation in the industry and we will still look to participate – if the right opportunity presents itself.
Strong focus on improving our ESG performance
On top of our notable consolidation efforts, we made a lot of progress improving the environmental profile of our fleet and developing our company culture through deliberate and thoughtful leadership training programmes.
In 2021, we continued to make notable progress towards our emissions reduction measures and the optimisation of our vessel operations. We are committed to meeting the IMO’s Carbon Intensity Targets ahead of schedule, including its regulations on sulphur emissions and 2030 goals to reduce carbon intensity by 40% and total GHG emissions by 50% against a 2008 baseline.
We are working hard to reduce our current fleet’s carbon intensity to 4.35 gms/T NM by 2028, meeting the IMO’s 2030 targets ahead of schedule. In 2021, Hafnia’s carbon intensity as measured by the Annual Efficiency Ratio (AER) was 5.40gms/T NM, 6.40% better than the present IMO baseline. In 2021, Hafnia’s owned vessels sailed 161,634 nautical miles (NM) more than 2020. Despite this they consumed 7,256 MT less fuel and emitted 22,866.8 MT less CO2, with the Energy Efficiency Operational Index (EEOI) improving by 2% compared to 2020.
On the social front, the industry faces several challenges, chief among them gender diversity and employee health and safety. Hafnia recognises the leading role it has to play in addressing these issues and is consistently working on initiatives to ensure a fair, safe and inclusive work environment, where everyone is encouraged to achieve their full potential. This past year we launched several initiatives to help achieve and maintain this positive working culture, including mental health and wellbeing programmes and employee assistance initiatives. It is important to us that all our employees have a voice, hence our monthly townhall meetings and diversity group surveys, and that everyone at Hafnia is aware of our activities and challenges through our regular internal magazines and newsletters.
On the governance front, simply put, Hafnia is committed to upholding the highest corporate governance standards in the industry. Hafnia’s governance policies and practices are created to comply with applicable laws and ethical standards while being mindful of the Company’s long-term performance and financial soundness. The policies abide to the overall principles of uprightness and fairness in accordance with leading market practices, while aligning with the interests of the board and directors and management, and balancing the reasonable expectations of all stakeholders. If any of our stakeholders feel there are ways we can improve our governance frameworks, we encourage you to share your thoughts with us.
The fourth quarter of 2021 showed improved earnings for the product tanker segment. I am pleased with our performance relative to peers under circumstances that continue to be challenging for the industry and the world.
Amidst this considerable uncertainty, Hafnia has achieved much to be proud of and is excited about the future.
Mikael Skov, CEO