Ladies and gentlemen, thank you for standing by, and welcome to Stolt Nielsen's Limited Presentation and Conference Call for the Third Quarter twenty twenty Results. I must advise you that this conference is being recorded today, Thursday, October 8. And now I would like to hand the conference over to your speaker today, CEO, Niels Stolt Nielsen. Please go ahead.
Thank you. Good morning, good afternoon. Thank you for joining us on this third quarter earnings video conference. Together with me as always Jens Grindel Hegge, our CFO. I will be presenting, I guess you can see on your screen, but you can also retrieve a copy on our website.
Moving to the agenda, we will go through each of the businesses. Jens will take you through the financial highlights and then we will open up for question and answers. The net profit from continuing operations came in at a nice $31,000,000 The strong improvement in EBITDA, we saw a strong improvement in EBITDA from all of our business divisions. I think that one thing that was nice and what makes it a strong message is that the volume held up in all of our businesses. So in the beginning of the pandemic, we were expecting eventually the volume to start coming off as the global economy slowed down.
That has not happened. And in the third quarter, we saw relatively healthy volumes. And on top of that, we also got our costs down, of course, much driven by the lower bunker cost because of the oil prices, but also the actions that we took early in the pandemic. Our gross debt also increased in the third quarter by $27,000,000 We have secured liquidity. Jens will take you more through that later.
We have approximately $05,000,000,000 of liquidity. We also saw a strong recovery in Stolt Sea Farm in the third quarter, really the business division that was hit the most from the pandemic and the slowdown. And also, as we announced early in the quarter, Stolt Tankers, we took the opportunity to acquire five modern stainless steel ships from CTG, which is currently with Odfjell, but we will be taking them over towards the end of this year. Operating profit operating revenue slightly down, but EBITDA up to €139,000,000 for the quarter. Operating profit up by €24,000,000 to €74,000,000 net profit up €26,000,000 from previous quarter up to €29,000,000 net profit.
And our debt, as I said, was down €27,000,000 and a gross debt of $2.54 and tangible worth slightly up at $1,600,000,000 Am I moving the I'm moving. Okay. Sorry about that. I'm not putting all my glasses. So if you look at the net profit variance analysis between the second quarter and third quarter, you can see the nice blue columns there, higher operating profit from Tankers of EUR 8,100,000.0, higher operating profit for Stolthaven of EUR 3,500,000.0, SDC higher operating profit of EUR €4,600,000 and a great recovery in Stolt Sea Farm of €8,600,000 Then slightly lower higher corporate costs, higher net interest expense because of well, we secured a lot of liquidity and that comes at an expense, some more losses of $1,600,000 of FX and $2,900,000 of higher income tax compared to previous quarter.
And then we took, as you remember, a write off of our Sturgeon business, our Caviar business of EUR 8,000,000 in the last quarter, which we didn't have in this quarter, bringing the operating profit for the group in the third quarter to CHF 29,200,000.0. Next please. If we just quickly go back and see how the year developed, the pandemic started early in the year, but really the big impact started when the lockdown was announced. We were active or Jens and the finance team did an issue in February of raising EUR 141,000,000 really before the pandemic came out, but that was a nice timing and good pricing. So we took the advantage of the bond market.
Then Europe went into lockdown and gradually the rest of the world went into lockdown. And at that time right away, we announced that we want to hope for the best,
but prepare for the worst.
And we went really into kind of lockdown or emergency mode. We declared that we weren't going to pay a final dividend for 2019. We took initiatives of cutting costs, travel and entertaining, professional fees. We did everything possible within our on our cost structure. We also totaling CHF 21,000,000.
We also cut back on capital expenditure either delayed or canceled of CHF 62,000,000. And then we started to talk to our banks. We looked at it. We want to secure enough liquidity to be able to make certain that we have enough liquidity to repay the bond that matures in March, but also to be able to face very downside scenarios. So we put ourselves a target of raising an additional $250,000,000 We talked to our banks, but while we were talking to our banks, the bond market opened up.
So we tapped that. We used that market and raised €132,000,000 in June. And then Jens has also worked on financing several of our terminals, which then puts us in a position today of having $500,000,000 of liquidity, which I think puts us in a position of strength, definitely having enough liquidity to be able to pay back the bond coming due in March, but also face if the market does turn or if the global economy does slow down significantly, we should be all right liquidity wise. Next slide, please. ESG is becoming a big part of our lives in a good way.
We at Stolt Nielsen, we signed up for the United Nations Global Compact Agreement and we have adopted the general reporting initiative for sustainable reporting standards. I've always said that we shouldn't just talk the talk but really also deliver and that's what we're working on. I'm quite proud when we start doing this you know, this standard, reporting standard. You know, we we I've always felt that we have operated in a responsible and sustainable way. And now when we start reporting it and measuring it, I'm quite satisfied to see what we have achieved so far.
But of course, this is an exciting voyage and journey which now we will report more be better at reporting on what we're doing, but also be part of the solution trying to help innovate, and yes, work towards a more sustainable future together. So you will see more of this sort of reporting and we will go deeper into the initiatives that we are taking in various each of our businesses. Next slide please. Then going into Stolt Tankers, if you look on Page nine, so the operating profit for the second quarter was €20,000,000 and I will explain the variance how it came up to 28,100,000.0 So we had a higher trading results of $8,700,000 and higher ship management expenses of $4.5 Lower depreciation and A and G that was driven by the initiative that has been taken of 3.6 and higher equity income of 0.4 bringing up to 28.1. The revenue decreased because we had less operating days.
And the reason that we had less operating days is not our fleet shrinking, but it's because of COVID, we had two ships, in quarantine. I think it was a week each. And also because of COVID-nineteen and the restriction associated with it, it has taken longer time to do the scheduled drydocking. So lower number of operating days from June twenty one-twenty nine in the previous quarter to 6118 this quarter. Utilization on the ships that we're operating was actually up, which is a good sign.
The contract that we renewed during the quarter, we had on average an increase of 3.9%. So trading results were up as bunker costs fell and utilization rose. Demanding costs increased EUR 4,700,000.0 as the costs related to crew changes increased due to COVID restrictions. So it is clear that the cost when you have to I'm very proud and this has really been the focus of the organization to change the crew that are overdue. I think we are down now close to the single digit of crew on board our 155 ships globally that are overdue.
And that of course comes with an additional cost. The airlines are jacking up the price, fully understandable. But also we have taken the initiative sometimes deviate our ships to The Philippines so that we can change the crew. And that comes at a cost. So if you look at the increased ship management cost for the quarter, more if we didn't have the additional cost associated with changing the crew, that actually the ship management cost would have been lower.
But we, again, feel it is important to make certain that the people on the front line, especially on board our ships, that we spend whatever is necessary to get them back to their family and so that we can change them or let them have a break. Next slide please. The bunker cost was of course a big reasons why we had improved earnings in the quarter. You can see that the average price of the bunkers that we consumed for the quarter of IFO and low sulfur fuel was $275 versus what we consumed in the second quarter of $388 So it's a 29% decrease in the cost of the bunker that we consumed during the quarter. The cost of the bunker that we purchased was up 12% from $274 to $3.00 $7 And then on the right hand side, the sell in index that we show of our deep sea fleet made a nice jump for the quarter and let's hope it continues.
Next slide please. Market highlights. So as I mentioned on the previous slide, we were able to get higher contract rates, sold COA volumes in most regions and we are approximately at 70% contract coverage, in other words, contracts of freight and COAs. As you can see on the slide here, the spot market actually did weaken during July and August. Now this usually do happen in July and August during the seasonal downturn.
If it's anything beyond that, we don't think so. We are actually now starting and you can see it slightly in The Middle East to Europe and also the TPW, Trans Pacific West, that it has started to pick up again. So we are cautiously optimistic that, that was nothing more than a seasonal slowdown. But because of the contract portfolio that we've had in place, 70% contract coverage, we have relatively small volume of spot available for spot. And therefore, when we do fix spot, we can be more selective in which spot contracts that we go after.
So I think that balance that we have, even though we see a small dip in the COIs, we don't see that clearly in our sale then because of our chartering strategy. Of course, the worrying thing is always that when the MR time charter rates have weakened, did weaken in the third quarter, but again, it didn't impact us because of our strategy towards going long contract. The Inter European Services are the regional fleets, Stolt Nielsen Inter European Service. It was a weak spot market reflecting a slowdown in the European in Europe from the lockdown. Customers' outlook is slightly more positive in the fourth quarter.
If there is one of our services in one of our regional markets that are having a challenging period, it is the Inter European. SNITS, Stolt Nielsen Inland Tanker Service, that's our barges on The Rhine, doing healthy relatively well even though we saw a weak spot market that is continuing to deliver nicely under our contract portfolio. SNCs, total mix and inter Caribbean service, the contract firm was COA volumes were stable at 80%. However, spot market weakened slightly. And the SNAPS, that's the joint venture we have with NYK in Asia, improved results in the third quarter due to tighter tonnage supply and Chinese demand grew combined with the low fuel prices.
Next slide please. If you then look going forward, what does it look like? Well, we know what the supply side is and the supply side, even though there were additional tonnage announced by one of our competitors in the last quarter, the order book still remains at a total order book that includes coated less sophisticated tonnage at 7.2%, which is low. You look at what the stainless steel part of that order book is, it's at 4.7%. So a healthy supply side.
And you can see then that I expect any huge orders going forward. So on the supply side, it looks good. So the question is, and it's all it's always been the supply side of our equation that has been the challenge because we, you know, the owners and speculators have ordered too much ships. It's never really been the demand side. If you look historically, the demand for this business, the service that we provide has steadily grown in line with the global GDP and the global trade, which is a multiplier of global GDP.
So it's always been very steady. It's the supply side that's messed up the market. This time around, it's absolutely the supply side looks very healthy. Now let's see, it's very difficult to say what's going to happen in the world going forward. It's so much uncertainty.
But if you took Riches and Glory, which we follow, they are showing here that there's going to be a decline in trade volume in 2020 for what we transport. But then they show a nice gradual pickup of a compound annual growth rate of 6.3%, taking all of the chemical market. So if that happens, and I hope they are and we do believe that they're right, if that happens, I think we will see a very healthy shipping market, going forward. Next slide, please. Stolthaven Terminals, what can I say, it's only blue positive development?
Steady as she goes. Operating revenue up to 59.8%, slightly up. EBITDA up from 52.2%, up to 36.4% operating profit 22.7%, up from 19.2% in the previous quarter and utilization slightly down to 93.7%, down from 95.2%. The operating performance excluding one offs improved as a result of the cost saving initiatives that we have taken throughout the group. The equity income improved as a result of prior quarter one offs, higher utilization and change in product mix, so an increase in joint venture equity income.
Strong and stable customer portfolio with underlying market conditions remaining stable in all regions and a lower impact of COVID-nineteen on the overall storage industry. We have seen that, yes, some of the areas, the throughput, the number of moves that the customers use in the tank have come down. But when they want to renew, if the contracts are up for renewal, they all renew it because they don't want to lose that space. So maybe the throughput is down, but the contracts remain healthy in all of the regions. And of course, packaging and healthcare industries remain strong as we see during the pandemic.
However, agrochem, industrial gases, paints, coating have a positive outlook and the auto industry has seen some recovery. Utilization in the industry remains stable with some weakening in petroleum. Next slide please. Yes, this is just a visual effect of how the utilization has been steadily improved and we're now up at steady around 94%, 95% which is excellent. Next slide, please.
The market outlook, the chemical activity in The U. S. Gulf and The United States rose by 2.5% on the three month moving average. The U. S.
Markets, we see steady overall, but chemicals and base oils in the automotive industry is still weak. Chemical capacity expansion is still active. Petroleum, LNG, LPG market has softened and expansion have been put on hold. Steady flow of inquiries for additional storage in our both Houston terminal and our New Orleans terminal. Asia, the Chinese chemical market has showed signs of improved post lockdown, but full recovery will be subject to the export market, which has not started to take off yet.
The Korean market remains stable for chemicals, but Southeast Asia is lagging in recovery. Our Singapore terminal's overall chemical out sorry, Singapore's overall chemical output fell by 2.4% year on year in July. The European market remains steady for chemicals, although the broader market remains weak due to exposure to the automotive sector, which accounts for 10% to 15% of the total chemical demand. Excluding pharmaceutical, chemicals output fell by 3.6% year on year in the first half of the year. And in South America, our terminal in Brazil, the chemical market continues to show signs of weakness with approximately 20% to 30% drop in throughput in recent months, but signs of recovery for both petroleum and chemicals we see at the current time.
Next slide please. Moving over to Stolt Tank Containers. So there we saw a slowdown in June and July. We actually saw a pickup in August. But we have so we had less shipments.
We had lower transportation revenue of €9,600,000 That is lower rate and lower number of shipments. We had lower demerger and additional revenues of just $200,000 But as a result of the lower number of shipments, we also had lower move expenses. And part of the move expenses is that the fuel surcharge in the second quarter was quite high and that is something that we didn't have in the third quarter. We had lower repositioning expenses of 0.6% and also here saving initiatives, lower other operating expenses and A and G of €3,700,000 and slightly lower equity income from our joint venture of 1,400,000.0 brings our operating profit for the quarter 17,500,000.0 Next slide please. Market outlook.
SPC, stock tanker tonnage is always a kind of a first in first out good indicator of where things are going. So the good news is that in the recent in August and September, things have been very active. And right now, they are very active. So we are short containers everywhere, which is always a good sign. So that's I'm not saying that it's less competition, there's a lot of competition, but there's a lot of activity going on.
So shipment levels expect to gradually return as economy rebound, but if we ask our customers, they don't expect levels to come back to normal until 2021. Yes, I think I've covered most of it. We will, of course, continue to focus on the digitization and optimization of our processes. And that is something that we that has served us well. We had a record number of shipments in the month of March when everybody was sitting at home.
So our systems are working very nicely and that's something that we will continue to work on actually more now than ever. Slide, please. Stolt Sea Farm, here we saw from a negative operating loss of €4,700,000 we saw a nice recovery up to €3,900,000 and that is because of higher turbot sales, both the volume and the price, higher saw sales, both volume and price, slightly higher operating expense because lower operating expense of 1,600,000.0 and lower depreciation and others of 1,100,000.0 bringing it to $3,900,000 Next slide, please. So just a word on Stolt Sea Farm because the people I'm now talking to are mostly shipping analysts Stolt Sea Farm is not getting its fair share of analysis amongst the analysts that are following Stolt Nation. And we need to do something about that.
I I fully understand that there's a conglomerate discount on Stolt Nielsen because we are in shipping terminals, tank containers. We are being portrayed as a as a shipping company even though half of our assets are in non shipping activities. But we and and the analysts, when they do the some of the part analysis are putting the right value on ships, on terminals, on containers, or relatively not. Often, they're pretty close to the right value, but they're not putting under the current structure, not putting any value in Stolt Sea Farm, basically nothing. So I think that this is something that we need to work on and making Stolt Sea Farm more transparent.
I kindly ask the analysts out there, the shipping analysts out there to ask their seafood division to have a look at Stolt Sea Farm and we will be better at providing more information, more detailed information. But when I look at how agriculture companies, land based agriculture companies that are trying to become land based or are trying out recirculation technology. And if I look at the pricing that they are achieving, I start wondering, you know, if we can continue with this current structure where Stolt Sea Farm is kind of not getting any visibility or value under the current structure. We have I'll just remind you, we have a unique position where we have a multi site production. We have 13 farms around the world, so spreading our risk so that we don't have everything at one location.
We have two hatcheries that supplies both sole and turbine. We operate our operations are in five different countries. We sell our products in 30 plus countries and we have four fifty employees globally. Next slide please. Sustainability is of course a big part of our, reality, our everyday life now.
And land based farming is something that, a lot of companies are trying. I would like to remind or you can pass this on to this seafood analyst in your bank that we have been doing land based agriculture for thirty five years, and we have done recirculation for twenty years. These are just two pictures of our farms, but this is real stuff. We have it's nothing that we promised to deliver. Yes, we're going to we have cracked the code of how to produce consistently juveniles for both sole and turbot.
And we have done that over twenty years. We've done research on sole. We have cracked the code and we are now ready to go on full scale. We have two recirculation plants, one that is up and running and one that will be completed by the end of this year. So this is something that it's nothing that we it's not a pie in the sky kind of thing.
We are there. We have an EBITDA. We have proven technology. So this is something that we will work on. It doesn't have to talk to shipping analysts in the area to and that's our fault because the way we're structured.
But it's absolutely something that we need to work on. Next one. Stolt Nielsen Gas. Sorry, we didn't update the picture of the ship that is on sea trials. It's scheduled now to be delivered on the October 12 and the first ship will then go to Petronas for a three year charter.
The second ship, probably at end of this year or beginning of next year, also on the three year bareboat to HIGO, formerly known as Golar Power. We have loans in place that is agreed upon that we will draw down upon the on delivery for the two first ships. We have four additional ships, which has been built with SOE in Nantong in China and the delivery of that one is the first half of twenty twenty one. And I believe we are also working on securing financing for those four ships. And our terminal in Sardinia has been impacted by the COVID, but we expect that to be in operation.
It's being delayed from the end of this year to the beginning of next year. Next slide please. I think it completes my part of it and Jens will take you through the financials.
Thank you, Jens. So good afternoon to those of you in Europe and good morning for those of you in The United States. As noted, I'll review the financials and some balance sheet items and also want to remind you that we have not only this presentation, but also our press release that came out this morning together with the interim financials. They're posted on our website www.stoltnilsson.com. Also our fiscal year runs from December 1 through November 30 for those of you who weren't aware of that.
And I also want to mention another thing in that 2020 is our first year where we report according to IFRS 16. So there are some 2019 and 2020 numbers that are not directly comparable. Just keep that in mind when you look at the year to date numbers. What you have on this slide here is a view of our net profit. And if we start with the operating profit before one offs on top, you see the quarter came in at €72,000,000 which was a substantial improvement up from the 51,200,000.0 that we had in the second quarter.
Not many one offs this quarter. We had one adjustment at Stolthaven, but operating profit as reported you see was up about $24,000,000 And a significant part of this improvement came from tankers and SGT. A lot of it was, as Niels explained, driven by lower bunker cost together with also a strong recovery that we saw in Stolt Sea Farm from the relatively weak second quarter. In addition, it's worth noting that we had quite a significant reduction in our A and G administrative and general expenses this quarter and that's something that relates to the initiatives that we put in place early on in the pandemic. So our A and G costs year to date, if you look at that, gives you a better visibility of it, is actually down about $18,000,000 or about 12%.
Now some of this is due to FX impact, some of this is also due to the IFRS 16 treatment, but a good portion of it is also driven by the initiatives that were put in early on in the pandemic. Net interest expense increased as a result of the debt we took on, but also as we retired some of the March 2021 bond, we had a write off of debt issuance costs that typically are amortized over the whole duration of the bond. So we retired about $80,000,000 and had to take a related share of the debt issuance costs. Looking at the income tax expense, you see that for this quarter it was €4,600,000 up 2,900,000.0 as Niels mentioned. That is really tied to a higher tax at Stolt Sea Farm due to the higher fair value of the inventory, the IFRS adjustment that we do to the inventory.
Net profit from continuing operations therefore came in at €30,500,000 and that's up from €12,300,000 that we showed in the second quarter. And as you will see below there, there was a $9,300,000 loss in the prior quarter compared to $1,300,000 this quarter from discontinued operations, so an 8,000,000 swing. And that puts us at $29,200,000 net profit this quarter. Also, if you take a look at the EBITDA, EBITDA is before the fair value adjustment of biological assets and insurance reimbursements. That came in at $139,000,000 which is substantially up on the $122.8 reported in the second quarter.
If you look at this is a slightly different view of the balance sheet and I'm focusing here on covenants. But you can see in the top left quadrant you have our debt. This is gross debt of $2,540,000,000 at the end of the third quarter, slightly down from $2,568,000,000 in the prior quarter. And likewise, you're seeing an increase in our tangible net worth, which is the light blue column, going to coming up at $1,607,000,000 up from $1,580,000,000 in the second quarter. And those two improvements combined resulted in our debt to tangible net worth coming down from 1,620,000,000.00 in the prior quarter down to 1.58 And again this is measured basis IFRS 16.
So for those of you who are used to seeing this pre IFRS 16, it means that we would have been about at the 1.5 to one perhaps even a bit lower this quarter, so commensurate with the target set by the Board. Going to the right hand side, you see another one of our covenants, it's EBITDA to interest expense. With the improvement in the EBITDA that ratio also improved to 3.41 for the quarter. And to the bottom left you have our net debt to EBITDA not exactly a covenant, but still an important measure of our leverage and that dropped significantly down to 4.85% for the quarter driven by the stronger EBITDA. If you look at the bottom right quadrant, you can see the part of the driver here and that we are seeing lower EBITDA quarters dropping off and higher EBITDA quarters being added to what is a twelve month rolling total of the EBITDA.
I mentioned the impact of IFRS 16 and if you compare like for like the impact year to date of IFRS 16 on EBITDA is about $35,000,000 So if you compare those two that means overall EBITDA year to date is about a $5,000,000 improvement, but that still does not negate a significant improvement that we have seen throughout the year where we started with a weak quarter, but now showing strong signs of improvement. That $35,000,000 equates to about $11,500,000 So still if you take out $11.5 of the third quarter, it's still very strong quarter EBITDA wise. Looking at our capital expenditures, year to date we have done $117,000,000 And for the quarter, the third quarter alone, we spent about $44,000,000 This is driven by $22,000,000 spent in the Tankers and that includes about $14,000,000 on the progress payments for the five ships that we have bought. We also spent about $16,000,000 in terminals, predominantly in New Orleans and New Zealand. And also as part of our committed commitments to Aloneer, we injected a further $5,000,000 in additional equity as they are getting ready to take delivery of their first ship.
Sea Farm completed the construction earlier this year of the Servo recirculation farm. And the part that you see here is our net contribution for the Portuguese farm, about €2,000,000 in the third quarter. And that farm is expected to come on in 2021. And then the CapEx you will see for 2021 has now increased significantly for tankers and that's of course reflecting the acquisition of the five ships from CTG. Next view here is really a development of our liquidity position as we go forward.
And if you start on the left hand column, you will see where we ended the second quarter with $230,000,000 in cash and $181,000,000 in availability under our two revolving credit lines, so for a total of $411,000,000 During the third quarter, we saw operating cash flow of 107,000,000 And we had the capital expenditures that have just went through of €44,000,000 Under other investments, this includes money spent on dry docking. It also sold well, dry docking was about $5,000,000 for the quarter. And in addition, we sold assets for about $10,000,000 So that actually had a positive impact of 5,000,000 if you look at these three combined, means our cash flow from free cash flow ended up being $68,000,000 for the quarter, marginally up from $64,000,000 in the second quarter. Also we did the bond in June that Niels mentioned, S and I $2,009 132,000,000 inflow and that was used to about $8,000,000 of which was used to retire the March 2021 bond and a further $32,000,000 on regular principal payments for a total of $112,000,000 And then we had repayment of the outstanding balance on the revolving the main revolving credit line that we have of 130,000,000 So after that repayment, we have not drawn anything on the revolving credit line that's fully available for use.
We also paid down $12,000,000 on our finance lease liabilities. And if you add in also the effect of the exchange rates FX, we ended up with cash of $184,000,000 so slightly down from the $230,000,000 but a substantial increase in our availability under our two revolving credit lines up to $311,000,000 for total liquidity of $495,000,000 at the end of the third quarter. Also to remind you of our objectives is still that we want to improve our free cash flow, reduce debt and maintain a strong liquidity position going forward. And that leads us to find it a maturity profile. You've seen that we have about 48,000,000 left for the rest of 2020.
Also with our liquidity position, pretty much all of the 2021 is taken care of. So we are in a very good position going forward. The March 2021 bond, this SNIO5, will be repaid with cash on hand. And in addition to what we already showed you on liquidity, we are working on additional facilities, $165,000,000 facility to be secured by the Murdoch and Dagenham terminals expected to close in the next few weeks. And also the $100,000,000 revolving credit facility as part of our COVID initiative just to make sure that we have access should it be necessary to additional liquidity in case there should be a, what we call, worst case hit from the COVID-nineteen pandemic.
And in addition, we will now start also working on financing the five CTG ships that were acquired. Two of those will go into our joint venture with NYK and there will be non recourse financing secured for those two ships. And then three ships we will take on our own balance sheet. So with that, I'd like to pass it back to Eunice.
So key messages before we open up for questions. Relatively strong quarter with nice contribution from all of the businesses. Makes us cautiously optimistic that maybe it's not going to hit us as hard as we initially expected. However, we are prepared. So we hope for the best.
We plan for the worst. And we are ready if there is a further slowdown or if there's further restrictions in the world due to the pandemic. Jens showed you that we have a strong liquidity position and we have taken early actions, not only short term action, but I think we have learned a lot of potential long term savings coming out of that exercise. It's a favorable supplydemand, at least supply side in tankers. So when the global economy eventually do recover, we should have a strong shipping market and then we will proceed with the IPO that we have planned for.
We believe and we are seeing steady as you go at Stolthaven, steady improvement there. Stolthaven, great activity, so steady improvements as you go in both terminals and tank containers. And Sea Farm, we saw a nice recovery in the third quarter. Now of course, a big part of that market is in the restaurants and the hotels sector. So if there is a major lockdown, again, might be impacted, but long term prospects for that business continue to look fantastic.
So I think we are in a strong position and we are well prepared for whatever may come our way. So operator, that or how does it work? We're now open up for questions. Hi, this is a test, is that one? Regarding the COA renewals, is the 3.9% increase a number compared to the same period last year?
Now the 3.9% is what we achieved in previous in the third quarter. So each quarter we announce the results of if we were able to on average to get an increase or decrease. So it's comparable to previous quarter. How much of the cost reductions are sustainable versus temporary one offs? Well, that is a discussion that we have internally.
And I don't want to put a number on it. Big part of it is because we have hiring freeze, we have promotional freeze, we have cut back dramatically on consultants, we we've have cut some salaries, which is not sustainable in the long run.
And we have
a hiring freeze and no travel and entertainment. So of course, we have learned that we are able to do the same amount of business during under these kind of structures, this kind of structure, this kind of cost structure and we are now analyzing what we can save long term and maintain long term and what needs to come back towards normal. So I don't want to give a number, but I think there are savings that we can get out of this exercise. What about a partial spin off of Stolt Sea Farm? This is again Philip Sisney.
Well, we need to do something because under the current structure, the analysts, I understand that maybe the shareholders of the equity market continue to price Stolt Nielsen as a conglomerate and they look at us as a shipping company and shipping company shipping is totally out of favor these days. So but there is justification for keeping tanker terminals and tank containers together. But the fish, the sea farm, I've always said that we have built up an absolute fantastic knowledge in both Turbot and Sol. And we have spent twenty years in developing Sol. I don't want to do anything with that business before we are able to show the EBITDA coming from that twenty years of investments in developing the species.
But if you look at other industries, other companies that are listed, that trying to develop land based farming or recirculation farming, and you look at their pricing, some of these companies haven't produced a ton of fish and are priced higher than the market cap of Stolt Nielsen. So we are exploring the opportunities. We are looking at various ways of how to get the valuation more transparent for Sea Farm. You mentioned increased ocean freight costs for containers to impact margins. How big share of your container activity is seaborne traded versus land based traded?
So I would say that 90% of our business is seaborne and 10% probably is domestic. Now remember both the trucking and the ocean freight is a pass on through the customer, but it takes it's lag. So when the when the cost goes down, it takes longer time to pass on to the customer. When the cost go up, it takes we are trying to be as quick as possible to pass it on. There is always a lag.
But just to answer your question, think that I can come back to you with the exact number of Iowa, estimate that 90% of the container moves are over the ocean. What kind of COA coverage should we expect going forward, for example, for the fourth quarter and 2021? I think that 70% is pretty correct. So you can plan on that. Would a spin off Solstea Farm in a separate IPO through a dividend to the existing shareholder be a potential structure that you could look at to achieve proper valuation?
Yes, there's different ways of doing it. So we are exploring to see what are the alternatives. Sir, Mr. Stolt Nielsen said that let's hope it will increase when talking about Snee Index now at 0.61. However, looking at the report chemical tanker spot rate reported quarter to quarter, that could perhaps seem a tiny bit optimistic.
So the index that we report are actually numbers, so that's not being optimistic, that's just reporting facts. As you correctly point out, the reports from July and August show a drop in spot rates. That is really why we went long you know, been focusing on long contracts, and that's why we have a 70% contract portfolio. The only thing I can say is we think it was a slowdown as a result of the summer and that we are seeing in September and also continuing into October that the nominations that we see on the contracts are healthy. So we are not seeing any kind of fundamental deterioration in the chemical tanker segment.
That is okay. If there's sorry, go ahead, operator. There's one on the phone.
Thank you. Your first question comes from the line of Anders Carlson. Please go ahead. Your line is now open.
Yes. Good afternoon. My question goes a little bit to the five vessels that you are acquiring. You said two will go to NYK, but the others, are they going to be replacing existing tonnage or are they going be in addition to whatever you have today?
So let's look at the five. The five ships that we acquired this summer, they've been around for a long those those they were delivered they were ordered for $85,000,000. I think Old Faith bought them for around $40,000,000 $41,000,000 a piece. I'm pleased to announce that we bought them for $27,100,000 apiece. And then of course, you have some takeover costs on top of $27,200,000 some takeover costs.
These ships will enter into the Salt Nilsen Pool. It was an opportunistic buy. So in the short run, it will be an increase. But of course, we have an aging fleet and we have no new building program. So I guess this gives us a little more room before we need to start ordering new ships again.
So this is a win win for everybody. We don't add additional tonnage into the total chemical fleet, and it replaces some of the older ships that are scheduled to be renewed. We don't have any like these will be replacing those ships. In the short run, it will be an addition. There will be no total addition to the chemical fleet in the world, but there will be addition to our fleet.
And then we will recycle ships that are between twenty five and thirty years old as we feel is there when the time is correct for that.
Okay. And then a little bit of follow-up to an earlier question linked to G and A costs. It's kind of seems very random how they evolve, like except that they are very much down compared to where they used to be. But once again, can you say a little bit more about what level is a sustainable decrease and what can we expect to how much can we expect to move up again when you when you do go back traveling and and all of these other things that that are closed down during during COVID.
It's very difficult to say. I think that we should be able to retain some of these savings permanently. But as we grow as an organization, in this you have a salary inflation, etcetera. So I think overall, we should become more productive, more efficient. I don't think it's necessary.
I don't think people want to travel as much as we did before. I think that the way we are doing and talking to each other now, I think it's very, very, very important to have face to face meeting, but maybe not as much as we used to. So I think the world has changed and so will we. It is too early and we will work on it and now we are working on it to see what is permanent savings and what we have to go back to. I mean, we can't forever have a hiring freeze.
And we need to do promotions and we need to, to a certain extent, have external consultants help us. But of course, we have learned during this lockdown that we were actually able to deliver an excellent service working from home, not traveling, not promoting, not hiring, just with the current resources that we have, we deliver excellent uninterrupted service to our customers. So we need just to find the right balance. The only thing I can say is that there will be permanent savings from this exercise, but you're not going to get me to say what number that is going to be. But trust me, it is very much a focus of the organization.
Okay. I had a quick question on the container side. The movement cost per container this quarter was the lowest that I have seen, at least dating back to 2008 or something. You said something that you expected it to come back. Is it going to come back to more normalized levels?
Is this a one off quarter with such low cost base for the container segment? Or can we expect to see lower costs moving around containers as a standard going forward?
I think that the costs the move related costs came down significantly because they were I wouldn't say artificially, but they were high in the first and the second quarter driven by the fuel surcharge because of the the low sulfur fuel coming into effect 2020. I also think that there was a lower number, that trucking costs were low because of low activity during the pandemic, so that cost came down. The ocean freight didn't come down because they were able to manage the supply side of the number of sailings. But I will, before instead of me guessing, let me just, yes, make certain that we come back with that information to see if we believe that we will come back to normal cost or if there's permanent savings on the transportation cost too.
We'll come back to you. Okay. And just a final, you know, a little bit of defense to the shipping analysts. You've never been very open about anything in Salt Sea Farm, so it's kind of difficult to judge. I know I've been following the company for a few years.
So, I mean, there has never been any volumes or anything on a quarterly basis. And, yeah, it makes it difficult to to to address. So that's that's that's
I fully understand.
Feedback from a shipping outlet. But
Yeah. I'm not But that's that's I'm I'm yeah. Thank you very much. I don't wanna it's it's fully understand. It's our fault, the way that that current structure is.
My message is that we need to make Stolt C far more transparent so that it gets the proper valuation both by the analysts that follow the company, but also by the market. So we will look into that and look at our alternatives. We have not received any further questions here. Operator, are there any other questions?
We do have one more question on the phone line. This comes from Lukas Daul of ABG. I
was wondering the financing plans going forward that you have put on Slide 39, when that is carried out, will you have any unencumbered assets left that you can use as collateral?
Yes. We still have some terminals that are unencumbered and investments in the joint venture terminals that are unencumbered. So I think if you look at more specifically the Australia, New Zealand terminals have no debt against them, neither the Brazilian terminal and neither the Korean terminal that we have are holding in that terminal.
Okay. Very good. And then on the bunker costs that you sort of touched upon in the beginning of the presentation. I mean, going forward, could the rule of thumb be that whatever your purchase cost was in the prior quarter, that's what's going to be the consumed cost in the following quarter?
Not directly. It's the lead time isn't the full whole quarter. So it's difficult now to say that looking at the purchase on this slide that is on the screen now, the $3.00 7,000,000 in the third quarter may not be exactly what we'll have as a consumed cost in the fourth quarter. That the second quarter purchase equals the third quarter consumed pretty much is a bit more of a coincidence because the prices came down and then came slightly back up again. So but if you assume that the $3.00 7,000,000 gives us some visibility into the fourth quarter and then we have to apply a bit of delayed impact from what we see happening in bunker prices that should give you a way of getting an approximation of what the consumer cost might be in the fourth quarter.
Okay. That sounds good. Thank you.
Thank you. There are no further questions at this time. Please continue.
Thank you very much for attending our earnings call, and we'll talk again for the fourth quarter. Thank you very much.
That does conclude our presentation for today. Thank you all for participating. You may now disconnect.