Tanker Market is Solid

The year 2001 must be described as a very healthy year for tanker owners. Although it is a fact that freight rates for all tanker types have fallen substantially and continuously through the year, the average rates for the year have been quite strong. For product tankers of various sizes, 2001 was even better than 2000. Rates for medium sized crude carriers were moderately weaker, while for VLCCs they dropped significantly. Despite declining freight rates for crude carriers, the profitability for all tanker was, for the second consecutive year, remarkably high. Modern VLCCs started the year at an incredible $70,000/day on the spot market. Almost immediately, however, the declining trend set in which was to last all through the year except for a brief upturn in September. As an average for the whole year, modern VLCCs obtained $35,000/day, down from $53,000/day in 2000. Old VLCCs reached $20,000/day, compared with $33,000/day in 2000. Medium sized tankers followed the same declining trend as VLCCs, with earnings at $50-60,000/day at the beginning of the year and at $20,000/day at the end of the year. However, the fall in average freight rates was far more moderate than for VLCCs. Both Suezmaxes and Aframaxes obtained, according to Platou calculations, $32,000/day in 2001, down from $40,000 and $37,000 respectively in 2000. The peak year for product carriers was 2001, not 2000. Aframax clean carriers (LR2) last year obtained the highest tc result for any type of tanker, $41,000/day, which was $9,000 above the 2000 level. Panamax clean carriers (LR1) reached $32,000, up $6,000 from the year before, while the MR type rose from $16,000/day in 2000 to $18,500/day in 2001. The active tanker fleet increased by .9 percent from 2000 to 2001, calculated on an annual average basis. The active VLCC fleet increased by .5 percent, while the rest of the tanker fleet grew by one percent. Deliveries of new tankers reached 13 million dwt in 2001 (of which, 26 were VLCCs), a relatively low figure compared with deliveries of 21 million dwt per year in the previous two years. Approximately 15 million dwt were sold for scrapping in 2001, and four million dwt were sold for conversion. A decrease of two percent or more in tanker tonnage, combined with only a modest increase in the active tanker fleet means that there should be a further two to three percentage points drop in utilization rate. Source: The preceding was excerpted, in part, from The Platou Report 2002. The segment on The Tanker Market was authored by Erik M. Andersen, R.S. Platou Economic Research a.s. R.S. Platou Shipbrokers A.S. is headquartered in Oslo, Norway, and can be contacted by: tel: +47 23 11 20 00; fax: +47 23 11 23 00; or on the Worldwide Web at www.platou.com.)