Tankship Asset Price Forecasting Mysteries Explained

MarineLink.com
Wednesday, February 05, 2014
Tankship clean sector supply: Image credit McQuilling

Marine transport advisors, McQuilling Services recently released its 2014-2018 Tanker Market Outlook that forecasts spot freight rates across eight tanker classes and 13 major trading routes.  This year’s edition also includes a forecast of asset prices over the same period for newbuilding, 5-year old and 10-year old tankers in these eight tanker classes. An insight into the methodology of this forecast follows:

"This note discusses an important element of McQuilling’s forecasting process – the development of tanker supply.
 
Tonnage supply in the tanker shipping market today must be viewed in the context of the last 45 years of marine crude oil and petroleum transportation activity.  There has been a massive shift of tonnage and cargo carrying capacity away from the larger tanker sectors and towards the smaller tanker sectors over the last generation of 25-30 years.
 
Focusing on the last 20 years, until very recently, tonnage supply growth had continued to be virtually stagnant in some sectors as additions and deletions have effectively cancelled each other out.  For example, the combined number of vessels in the VLCC, Suezmax and Panamax sectors increased by a mere 83 units from 1991 through 2004, a compound annual growth rate of 0.57% for this 14-year period.
 
As some sectors were slowly modernizing by the process of “out with the old, in with the new” without demonstrating measurable absolute growth, the Aframax sector showed itself over this period to be the most preferred tonnage class of all, increasing 50% in terms of the inventory of trading vessels from 1991 through 2005, a 2.8% compounded annual growth rate.
 
In the years leading up to 2000, significant chronic tonnage overcapacity existed in several sectors; remnants of unbridled speculative ordering from a generation before in the 1970’s.  With surplus capacity eliminated, except in extreme cases, any significant and sustained responsiveness or sensitivity in freight rates stemming from changes in demand for the better part of two decades.  Since about 2001, the balance of tonnage supply and transport demand has moved closer in several sectors.
 
However, a period of robust ordering in the 2006-2008 timeframe has again produced tonnage supply levels well in excess of demand.  This was especially true for dirty tankers as illustrated below.  These inventory levels are again limiting freight rate response to changes in demand.

 
We calculate the supply of vessels capable of meeting the transport demand for each year.  The results are developed from the start-of-year tanker inventory for each year.  Additions to the fleet from the delivery of newly constructed vessels are added to this inventory, while deletions during the previous year (scrappings and sales into offshore conversion projects) are deducted from the beginning inventory.  The net result is the ending inventory and the average inventory for the year is just the beginning plus ending inventory divided by two.  For the clean sectors, we calculate supply for product carriers and IMO 3 class vessels only (see graph on the left),
 
The average vessel inventory figure is adjusted downward to account for the inefficiencies of the transportation system (as discussed in Industry Note No. 5 - Tanker Market Outlook – Forecast Development).  We can reflect these inefficiencies by directly reducing the average annual inventory figures by the total inefficiencies implied by these factors. "

https://www.mcquilling.com/

 

Maritime Reporter September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Coast Guard Foundation to Honor USCG in Miami

The Coast Guard Foundation, a nonprofit organization committed to the education and welfare of all Coast Guard members and their families, announced today that

Maritime Broadband Opens Office in Greece

Maritime Broadband has expanded its worldwide footprint by opening an office, Maritime Broadband Hellas, in Athens, Greece. The new office addresses the growing

Renewable Energy: Schottel Tidal Turbines Ready For Use

In the last months Schottel  successfully tested its hydrokinetic turbines in Strangford Lough, Northern Ireland. The full-scale tests included 260 operating hours under realistic conditions.

Shipbuilding

Catamaran Passenger Ferries Delivered in Angola

Incat Crowther announced the delivery a pair of 30m catamaran passenger ferries, Macôco and Panguila, to Instituto Marítimo e Portuário de Angola. The vessels, built by Astilleros Armon in Spain,

Offshore Oil: Lamprell Completes Caspian Sea Drilling Unit

UAE-based Lamprell said that it completed construction of the second Caspian Sea jackup drilling rig, Mercury, for service in the Caspian Sea.   "I am delighted

TRIYARDS Buys into Aluminium Shipbuilding Expertise

TRIYARDS Holdings Limited, an offshore vessel fabrication and engineering solutions provider to the oil and gas (O&G) industry, has added new capabilities, products

Tanker Trends

Weak Oil Threatens US Export of LNG

Plunging global oil prices may turn hopes for cheap liquefied natural gas supplies from the United States into a costly disappointment for Asian buyers who have

Singapore’s MPA Discuss LNG Bunkering

The Maritime and Port Authority of Singapore (MPA), Antwerp Port Authority, Port of Rotterdam and Port of Zeebrugge participated in a Liquefied Natural Gas (LNG)

New Standard for LNG Cargo Containment Systems

Wilhelmsen Technical Solutions (WTS) said it has successfully completing the gas trial for the first LNG carrier built to a Boil Off Rate (BOR) of 0.08% per day.

Finance

Weak Oil Threatens US Export of LNG

Plunging global oil prices may turn hopes for cheap liquefied natural gas supplies from the United States into a costly disappointment for Asian buyers who have

Continership Alliance Expands to US Trades

The CKYHE Alliance (COSCO, "K" LINE, Yang Ming, Hanjin Shipping, and Evergreen Line) has announced they will expand their cooperation scope to U.S. Trades and CKYHE

Total CEO Killed in Moscow Runway Accident

Private jet collided with snow plow during takeoff; Total's CEO a defender of Moscow policies. Insiders Boisseau and Pouyanne long seen as potential successors.

Consulting

Vice Presidents Rejig at Caterpillar Inc

Following the previous announcement regarding two group presidents’ retirements and new responsibilities for another group president, Caterpillar Inc. (NYSE: CAT)

Northrop Grumman Sponsors Maritime RobotX Challenge

Northrop Grumman Corporation is expanding its support for science, technology, engineering and math (STEM) education across the globe by sponsoring the Maritime RobotX Challenge in Singapore, Oct.

COWI NA Merges its Marine Companies

Ben C. Gerwick, Inc. and Ocean and Coastal Consultants, Inc. merger creates new player in the North American marine engineering market COWI North America, Inc.

 
 
Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Salvage Ship Electronics Ship Repair Ship Simulators Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2691 sec (4 req/sec)