Officer and Mr. Gianni Del Signore, Chief Financial Officer. Today's call is being recorded and will be made available for replay beginning at 11:00 A.M. Eastern Standard Time. The recording can be accessed by dialing 800-839-5492 domestic or 402-220-2551 international. All lines are currently muted, and after the prepared remarks, there will be a live question-and-answer session. If you would like to ask a question during the Q&A segment, please press star one on your phone. If your question has been answered, you may remove yourself from the queue by pressing the pound key. We do ask that you please pick up your handset for optimal sound quality. It is now my pleasure to turn the floor over to Ms. Emily Blum with Prosek Partners. Please go ahead.
Thank you, Ashley, and thank you for joining us for this morning's Third Quarter 2021 Earnings Conference Call for Pangaea Logistics Solutions. With us today from the company are Interim CEO Mr. Mark Filanowski and Chief Financial Officer Mr. Gianni Del Signore. Before I turn the call over to Mark, I'd like to read the safe harbor statement. This conference call could contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about Pangaea Logistics Solutions. Forward-looking statements are statements that are not based on historical facts. Such forward-looking statements are based upon the current beliefs and expectations of Pangaea Logistics Solutions management and are subject to risks and uncertainties, which should cause the actual results to differ from the forward-looking statements. Such risks are more fully disclosed in Pangaea Logistics Solutions filings with the Securities and Exchange Commission.
The information set forth herein should be understood in light of such risks. Pangaea Logistics Solutions does not assume any obligation to update the information contained in this conference call. Also, please recall that a supplemental slide presentation will accompany this call. Those slides can be found attached to the 8-K that was filed with last evening's release, which is available on the investor section of www.pangaea-ls.com under company filings or on the SEC's website at sec.gov. Now, I would like to turn the call over to Mr. Mark Filanowski. Mark?
Thank you, Emily. Hello to all who have joined us today for Pangaea's Third Quarter 2021 Earnings Call. This morning, I will provide an update on our operations and the overall market before turning the call over to Gianni, our CFO, to provide a more detailed overview of the third quarter 2021 financials. We will then open the line for questions. First, I'm happy to report that Ed Coll, our Chief Executive Officer, who was out on sick leave, is recovering well. We are in constant touch with him, and I can tell you he is proud of our performance this quarter. The timing of his return to the office is not yet determined, but I can tell you we all greatly miss his presence here. We hope you've had time to review our press release and accompanying presentation issued last evening.
Our third quarter results reflect both rising freight levels not seen in over a decade and the additional ship capacity that came on stream for us this year, including the three new building ships delivered to us and the three second-hand ships purchased. During the third quarter, which is seasonally one of our strongest, we saw the average published market rates for Supramax and Panamax vessels increase over 200% from an average of $10,286 per day in the third quarter of 2020 to $32,033 per day in the same period of 2021. This boosted our earnings. Further, the arrival of the summer ice season allows us to deploy the full strength of our ice-class capabilities to provide our clients with specialized services required for demanding conditions. Our average net TCE earned of $28,770 per day increased over 100% compared to the third quarter of 2020.
We report adjusted EBITDA of $33 million and adjusted Net Income of $21.7 million. We are working very hard to extract the most out of this market, and we continue to deploy our assets to serve our clients' cargo needs and help us drive increased profitability. While our earned TCE for the third quarter was the highest in many years, the rapidly rising market resulted in no TCE premium for us over the market averages. This is a normal consequence of a rapidly rising market, as spot fixtures become old quickly and our contracted cargo tends to lag instead of lead the averages in this kind of a market. However, our TCE earnings continue to improve heading into the fourth quarter. Through November 8th, we've performed 2,352 shipping days at an average TCE rate of approximately $32,993 per day.
The physical market has softened over the past couple of weeks but is still well above rates of a year ago. During the quarter, we took delivery of our third of four ice-class new building vessels, the fourth to be delivered to us later this month. Today, we are pleased to announce the purchase of a 2009-built Panamax for $19.9 million to support our core contract business. The vessel is expected to deliver to us in the first quarter of next year. So far this year, the improving market has worked in our favor, generating more operating profits, which will eventually turn into more cash earnings.
When this happens, our board of directors, keenly aware of our industry's volatility, will consider utilization of any cash in excess of business requirements to expand our fleet or make investments in strategic projects to reduce leverage or to return some excess cash to shareholders. We don't have a dividend formula, but we do have a good business plan. We all hope the shipping markets remain strong for a while to provide cash to do it all. I'd now like to turn the call over to Gianni to go over the numbers in more detail.
Thank you, Mark, and thank you all for joining us on today's call. Before walking through our financials, I'd like to expand on capital initiatives and highlight our results for the quarter. This year, we have taken steps to deploy our capital, focus on niches, and capitalize on an improving dry bulk market to generate and return shareholder value. We have used cash from operations to renew our own fleet, decreasing the average age of the fleet by 25% to less than nine years, increased our short-term chartered- in fleet, which requires significant work and capital investment with high charter rates and bunker prices, reduced debt as scheduled, and paid dividends. Turning to our third quarter financials, starting on page six of our presentation, the continued improvement in the market during the third quarter drove increases in both voyage revenues and time charter revenues.
Voyage revenues increased approximately 90% to $186.4 million, and charter revenues, which are opportunistic and more closely tied to market rates, increased approximately 372% to $26.7 million. The optionality of our charter-in strategy allows us to expand or contract our chartered- in fleet and, in turn, selectively release excess ship days into the market under spot time charter arrangements. Our TCE rates earned increased 116% to $28,770 for the third quarter of 2021 compared to $13,316 for the same period of 2020. Charter expenses paid to third-party shipowners increased to $103.7 million from $35 million, a 197% increase due to increases in market rates to chartered vessels and an increase in chartered in days as part of our flexible charter-in strategy, allowing us to supplement our own fleet with short-term chartered in tonnage at prevailing market prices when needed to meet cargo demand.
Unrealized gain on derivative instruments was $5.3 million for the third quarter of 2021. As we've discussed, we utilize forward freight agreements and bunker swaps to selectively hedge our exposure to the market on our long-term cargo contracts and forward cargo bookings. While this locks in future cash flows, the mark-to-market gains or losses can lead to fluctuations in the company's reported results on a period-to-period basis, while settlement of the position and execution of the fixture will occur at a future date. Net income for the quarter was $26.9 million, or $0.60 per share, compared to net income of $7.5 million, or $0.17 per share for the same period in 2020.
Moving on to the balance sheet and cash flows on page seven of our presentation, we ended the quarter with $49.1 million of total cash and cash equivalents following an active nine months of operating, investing, and financing activities. As you will see in our cash flow statement, in 2021, we generated $42 million in operating cash flow, which includes $7.6 million used in dry dockings and approximately $9.9 million used for working capital on our chartered fleet. We deployed $159 million in vessel acquisitions and generated $117 million in financing activities related to new debt facilities, finance lease facilities, which were offset by repayments as well as dividend payments. Further, as Mark mentioned, we have declared another $0.035 quarterly cash dividend payable on December 15th.
With that, I will now turn the call back over to Mark for any additional remarks before we get to the Q&A portion of the call. Mark?
Thank you, Gianni. We thank our customers, business partners, and shareholders for their continued commitment and partnership, and we look forward to updating you further in coming quarters. I will now open the floor for questions.
At this time, if you would like to ask a question, that is star one on your touch-tone phone. Once again, to ask a question, that's star one. We'll take our first question from Liam Burke with B. Riley. Please go ahead.
Thank you. Good morning, Mark. Good morning, Gianni.
Good morning, Liam.
Mark, on the dry bulk side, iron ore with Chinese steel production declining over the last several months has been moderating. And iron ore is an important commodity that you transport. But looking at the fourth quarter current rates that you're earning, it doesn't seem to be affecting the business. Is there something different that's going on in your iron ore demand?
Thanks, Liam. I just want to let everyone know that Mads Petersen from our Copenhagen office, managing director of our Copenhagen office, is on the line for questions also. So if you have any questions about that fleet that's managed out of Copenhagen, Mads will be able to answer those. But in answer to your question, Liam, about iron ore prices, the physical market has dropped over the past couple of weeks. The numbers that we put in that I mentioned in the conference call were for voyages that have been shipping days that have been performed so far this quarter. So I think we were still feeling the strength of that market when we look at those numbers. But looking forward, we see continued strength in the physical market, but not as strong as it was.
One of the reasons is some dampening of demand for iron ore, but there's a strong demand for coal on the other hand. So we don't see that the iron ore market will really drag spot rates going forward, but there will be some tempering of the volatility.
Okay. That's fair. And on the rates, the spot rates have been pretty healthy. Has there been any interest on your customer's part to come to you and say, hey, we'd like to fix some of these rates on a longer-term duration rather than operating in the spot market?
Late in the third quarter going into the fourth quarter, we have seen some activity, particularly in our ice business, people coming to us to try to fix the first, second quarter, maybe offer us cargoes through the rest of 2022. So yes, there's been a little bit of activity as the rates have dropped a little bit, but people still see a pretty good market going into 2022, and we'll be on that.
Great. Thank you, Mark.
Once again, that's star one for questions. We'll go next to Poe Fratt with NOBLE Capital Markets. Please go ahead.
Good morning, Mark. Good morning, Gianni. And if you would, please pass along my regards to Ed and my hopes for a speedy recovery.
Thank you.
Just if we could look at the forward cover or the days that you booked for the quarter, do you have a guess or an estimate on what you're going to see in shipping days for the quarter? And in the context of what you talked about booking, it seems like that potentially is less than half of the quarter that you might see in shipping days. And I'm just trying to understand what's going on, whether you're not booking that far in advance or just can you give me some context on that?
We do book some stuff in advance. The numbers that we put down are the days that have been performed up to November 8th. Those are the voyages in process, and voyages can take anywhere from 10 days to 40 days. We're in the middle of some of the voyages. We're at the beginning. We're at the end of others. That's just a snapshot in time that we disclose. In terms of what we see for the rest of the quarter, our fleet has dropped just a little bit since the third quarter, so there won't be quite as many shipping days in the fourth quarter. The third quarter is our busiest of the year, traditionally. Fourth quarter is usually pretty good too.
So with the market rates where they are today, they seem to have reached some kind of plateau here, and we don't expect they'll be substantially different than the first few days or the first five weeks of the quarter.
Okay. So that's a hard stop, Mark, as far as looking at November 8th. Those are actually so it looks like you're running a fleet of about 51 right now?
Yes.
Then can you give me an idea of sort of what your last day of booking was relative to that 33,000 a day of the TCE?
I mean, when you say the last day of booking, what exactly are you referring to?
I'm sorry. So you have an average right now that you've booked for the fourth quarter. Can you give me an idea of sort of what the range of that has been so far in the quarter?
So a lot of our business, we're performing contracts, forward bookings, and then from time to time, we're also participating in the spot market. So what we're seeing so far in the fourth quarter is a runoff of the business that we priced in the third quarter or completion of Baffin trade, which extends into the fourth quarter. So what we try to show in that graphic is basically what voyages we've performed through November 8th that are basically spillover of the third quarter going into the fourth. There could be some voyages in there that were priced towards the end of the third quarter that performed early in the fourth quarter. But it's a pretty wide range how we execute on both the contracted business, the spot bookings, and the forward bookings. So it's really difficult to pinpoint the exact time of booking those voyages.
What we're really trying to show is what is going on with our TCE earnings as we enter in the fourth quarter, and really, we would expect that increase. In a rising market, we tend to lag as the market rises. I think Liam had said that it was a higher rate going into the fourth quarter, which settled a bit pricing-wise, but fortunately, we're executing on business that we're pricing a few months or longer in advance.
Yeah. I guess I should have just asked, do you think that the rest of the quarter will be at the same level that you're seeing right now, that 33,000, or do you think it will be higher or lower for the rest of the quarter?
Spot rates have moved down some. Physical spot rates have moved down some from where they were at the end of the third quarter. I would say if there's a trend for the market, it's trending down a little bit, but still well above where it was a year ago.
Yeah. Again, I just didn't want to have people have the impression that you're going to be able to book the full quarter, 33,000. I mean, if you do that, then your numbers look even stronger than they did in the third quarter. So I was just trying to make sure that people are on the same page. Well, Gianni, congratulations on the new acquisition. It's the first quarter of 2022. Have you thought about how you're going to finance that right now?
Yeah. We're actively looking at it. I think our history of the previous acquisitions will hold true, so we're looking at various relationship banks and other sources, and yeah, I mean, we're pretty confident we'll be able to achieve in line with what we've done earlier this year, so we're actively working on it, and as we approach the first quarter and closer to delivery, we'll certainly be in a comfortable position.
Any thoughts, Mark, on selling some of the older assets, or are you going to sort of ride out the market and see what happens into 2022?
No decisions yet, Poe. The acquisition of this Panamax will give us a little bit of flexibility with our fleet that's dedicated to our bauxite trade in Jamaica. So that's all we're trying to do is to get a little bit more flexibility, read the market a little, and decide what to do with the older assets and when to do it. No decision yet.
And then the last new build is either close to getting delivered or might have been delivered by now. Gianni, can you give us an idea of how much CapEx is going to be recognized in the fourth quarter on that asset?
So fortunately, our JV partner will be contributing their final capital commitment to take delivery. So there will be the final delivery installment from our partners that will sort of make the cash impact of that delivery relatively neutral. There will be some delivery costs around $750, maybe $1 million of delivery costs to us. But fortunately, a lot of this was, we tried to have it as buttoned up as possible when we entered into these contracts for these new builds. So yeah, considering the capital coming in from our JV partners, it'll be a pretty small capital outflow for us in the fourth quarter.
Okay. Great. And then when we look at your derivatives book or your FFA book at the end of the quarter or September 30th, it looked like it was $10.9 million as far as an asset in the balance sheet. When was that runoff? I mean, can you give us an idea of sort of the aging of that FFA book right now?
Sure. Some of our positions settled October and November and December, but our coverage runs out up until and through 2023. So there is a bit of a runway there on final settlement of these positions. It does create noise on our P&L the way we recognize it, right? We've recognized this year substantial unrealized gain on FFAs. We've also realized some gains through the P&L as a reduction of charter hire throughout this year. But looking at a point in time, it certainly adds some volatility there to the P&L as we mark to market. So as we've seen the market decline, we will see a reduction in that position, both from settlement of the near-term positions or the near-term months of October and November and December, but we'll also see the mark-to-market.
Wherever the market may be, December 31st will certainly impact our P&L as we recognize that potential reduction in the value of that position.
Okay. And then just squeezing one last one, if you wouldn't mind. How do charter hire expenses look for the quarter? Mark said that you're going to run probably a little less shipping days in the fourth quarter than the third quarter, partly because of seasonality. Can you give me an idea of how charter hire expenses look for the fourth?
Charters and the rates have decreased along with the market. We're not directly correlated with the average market because we take ships all over the world at different places and in different positions. So we don't really look at charter hire expense as a number itself. It's just it is what it is based on the ships that we need to move our cargoes. But those rates, chartering rates, have moved down along with the general market.
Great. Thanks so much for your time.
Thanks, Poe.
We'll take a next question from Charles Porter, private investor. Please go ahead.
Well, thank you, guys. You've really been killing it. I'm a retail investor, so my question's a little beyond the quarter. And thanks for taking my call. I'm just curious. I've heard a lot of news, just macro shippers concerned about the emissions requirements for boat engines going forward in the next few years. And I was just curious how, for a relatively smaller firm, you guys are going to meet those challenges, especially since it seems like your fleet seems to be pretty new but may be impacted by additional requirements in the U.S. and EU. Thanks so much for answering. Thanks.
Thank you, Charles. That's a really good question. We're talking about it an awful lot these days. Mads Petersen has been watching those developments from Europe, so why don't I ask him to try to answer that question?
Yeah. Thank you, Mark, so the main thing I think to think about when you look at our own fleet in our company is that the core of it is relatively young, and actually, we are compliant with the first round of regulations coming in 2023, meaning that we will meet those requirements, but to the point that we fully, of course, acknowledge that the industry needs to do its part in terms of improving and reducing our emissions, however, the ideal solution is still not available, and what we're doing in the meantime is we're spending a lot of energy on how we run our ships, how we maintain our ships, and essentially using various new tools in terms of optimizing our maintenance program, for instance, to reduce drag on the ships by tuning propeller and hulls.
We are using various algorithms, machine learning-based algorithms in terms of optimizing the route, and all of that goes into reducing our carbon footprint. But in terms of the alternative fuels, the solution is simply not there other than potentially a power reduction, which will apply to essentially most ships less than, I don't know, 12 years old or something like that come 2023, which in the short term would be the way to comply. But of course, we are looking at and trying to follow all the technological advances that are being made in various directions. But right now, we don't have a solution. Not us, but no one really has that at the moment. So yeah.
I guess I can add two points. One is that when we were looking at building our new ships back in 2019, the answer generally was, o h, LNG will be the fuel of the future. Well, I think that's been discounted by the world, that LNG isn't really the answer. We didn't do it at that time because of the restrictions of the Arctic trade. We were not able to fuel the ships with LNG in the Arctic. So we didn't make that step. I think it ends up to be the right step for those ships. But the other comment I'd like to make is that efficient transportation is good for the world, and it's also good for shipping companies.
So we're trying to make our ships more efficient, as efficient as possible, so that we do burn less fuel and we do emit less harmful emissions to the world.
Thanks, guys, but the key takeaway, I guess, is the whole industry is just going to have to wait until the screws turn and technology meet with, I guess, this ESG push, right? I mean, we won't be able to upgrade something that hasn't been invented yet. Takeaway from here. Thank you.
If there are no further questions, I will now turn the call back over to Mark Filanowski for any final thoughts.
Thank you for participating in the conference call today. We hope to continue our progress and our performance throughout the rest of the year. Look forward to our next conference call. Thank you very much.
Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.