Eimskip celebrated its 110th anniversary at the beginning of the year 2024. Since its establishment, the Company has been interwoven the history of the Icelandic nation and carried an important societal role throughout its existence. During Iceland’s campaign for independence, Eimskip played a principal part, not the least because an independent island nation needs to be able to employ its own measures when it comes to the transportation of goods, which is the foundation for international trade.  Reliable liner service in the North Atlantic, based on strong infrastructure and experienced employees, is the core foundation for our valuable export goods reaching the foreign markets swiftly and safely. At the same time, Icelanders are able to enjoy imported fresh foods that were unavailable to us in earlier times. We now consume fruit and vegetables imported with speed and under the prime conditions and handling that only refrigerated container transportation can provide. The extensive international freight-forwarding network that Eimskip has built in the recent decades has furthermore expanded the Company’s product range, and provides customers with comprehensive freight solutions worldwide.

We live in an ever-changing world whose tides ebb and flow. A shipping company operating in the rough sea of the North Atlantic is not left untouched by the powers of nature, and is quite literally affected each day. Our long history is a tapestry of success and setbacks, however despite vicissitudes, results are predominantly beneficial to all. Increasing customer demand for speed and customised services, along with the digitalization of the fourth industrial revolution, encourage us even further in the quest for digital transformation that has been a signature theme in our strategy in the recent years. Sustainability has an ever-growing presence in the operation of companies. Eimskip has set ambitious goals in this regards, goals which will require ample investment in the coming years, not the least when it comes to the renewal of our vessel fleet. 

The market for talented employees is progressively competitive, and we know that in order to attract and keep competent workforce we need to offer a desirable workplace and vast opportunities for learning, development, and empowerment for our employees. At the same time, it is clear that the Company’s performance needs to be adequate so as to fulfil the financial commitments necessary to meet the demands of shareholders, employees, and customers. Therefore, we allow ourselves to be conservative in our base operation, where active cost control and rationality guide us in daily decision-making.

Through the years, Eimskip has become an increasingly international company. Earnings based on geographically dispersed locations bring strength to the Company. The Company’s home market is now defined by an area that reaches from Northern Norway to the Faroe Islands, Iceland, Greenland, Newfoundland, and the New England area on the East Coast of the United States. This market area suits us well. Common aspects that these regions share are: prosperity, high levels of education, a rich fishing heritage, and economies driven by export and import.

Eimskip captures the opposites of the old and the new, the progressive and the conservative. We understand the importance of maintaining the old and trusted, the rich heritage of the Company, while at the same time remaining brave, original and bold.  We do not consider these qualities as opposites, but rather as forces that need to be utilised in harmony. That way, we will achieve the greatest results.

Icelandic industry, Icelandic society, and Eimskip have been steadfast companions for 110 years. We hope that we may have the good fortune to continue this remarkable journey for the years to come.

A Year of Swift Changes
Overall, we are pleased with the financial results of 2023, marking the second-highest earnings in the company’s history. Our recent journey of streamlining, integration, and focused revenue management has proven successful. We see our core operations performing at a new and healthy level, allowing for investments that support future growth and development. These strategic changes, combined with our unique position as a niche carrier in the North-Atlantic with a global presence in reefer logistics, have created a robust operational and commercial foundation. However, our business is not immune to the external environment. In 2023, the normalization of the global shipping market continued after the extraordinary global rate increases resulting from the pandemic. The weakened global economy and past years’ inflation further affected the cost basis of our operations. Inevitably, we experienced some pressure on margins in our liner operations, affecting the results compared to the record year of 2022. The single largest impact of these market changes occurred in our Trans-Atlantic services, where we witnessed freight rates at a very high level at the beginning of the year before declining sharply in the second and third quarters and leveling off in the fourth quarter. These external factors also affected our international forwarding business, which nevertheless delivered solid results in 2023. At the end of the year, we once again entered a period of volatility in global freight rates, with sharp increases in major trade lanes following the grave situation in the Red Sea, which unfortunately has not been resolved at the time of writing.

Sustainability
Sustainability continues to be at the forefront of our corporate strategy and is integrated into our culture. We were proud to introduce new public sustainability targets in 2023. Among these targets is our ambition to increase the proportion of women in senior management positions, which has been steadily rising. We took a significant step in the beginning of 2024 when Jónína Guðný Magnúsdóttir joined our Executive Management team, making it the first time in the company’s history to have three women in such positions. In the environmental category, we have set an extremely ambitious target of reaching net zero by 2040. Given that 96% of our Scope 1 emissions arise from our vessel fleet, it is clear that an energy transition in our home market is needed to reach this goal. We remain hopeful that the Icelandic government will commit to being a part of this global trend by supporting further green energy production, essential for reversing climate change.

Strategic Sailing System Changes
Recognizing the trend of declining freight rates at the beginning of the year, we initiated the design of sailing system changes. The purpose of these changes was clear from the beginning: to save costs, decrease bunker consumption, and reduce carbon emissions while maintaining excellent and reliable service. Changing a system of this scale and complexity takes time. We implemented the first phase of the system changes in May 2023 and harvested the benefits over the next months. The second phase was implemented at the end of February 2024. It was not solely the revenue decrease caused by swift changes in the market environment that incentivized us to draw up sailing system changes, but we are also responding to new environmental regulations such as IMO’s CII rules and the implementation of shipping into the EU ETS system. On top of the regulatory requirements, we feel more demand than ever from our customers to make ocean transportation, already one of the most efficient modes of transportation in terms of carbon emissions, even more environmentally friendly. That aligns well with our ambitious target of reaching carbon neutrality by 2040.

Employee Engagement
We firmly believe that the foundation for performance is based on employee satisfaction, and we continue to put great emphasis on employee wellness and development. Employee engagement is one of our most important KPIs, and we were pleased to see the results of the 2023 engagement survey. It showed that our engagement level not only increased from the previous year but also that we are doing better on this measure than international companies in similar sectors. Opportunities for employees to learn and develop play an important part in employee engagement, and we continue to invest in resources that support employee development. In 2023, we launched a modern digital learning management platform that transforms the ways our employees can access training and learning material. Annually, we conduct international leadership training programs, and I am proud to share that out of 105 employees who have completed the program since 2022, 34 have already gained increased responsibilities, either by promotion to a new role or expansion of their current role.

Appreciation
Finally, I'd like to express my gratitude to all our stakeholders, who have each, in their own manner, supported our strategic direction in recent years. The Board of Directors, on behalf of our shareholders, has provided firm guidance and constructive feedback on relevant matters. Our employees have demonstrated both resourcefulness and resilience, providing excellent service to our customers in a highly dynamic environment. Our customers motivate us to continue to offer excellent service, being proactive and solution-oriented in meeting their total logistical needs.