McQuilling Services Industry's Spot Market Review for First Quarter
There’s no denying that the wave owners rode into 2014 on was a welcome way to start the new year (at least from their perspective). Earnings in the large crude tanker segment reached levels that hadn’t been obtained in three years and in the smaller dirty segment, in five or more years. But, with all things in life, “what goes up must come down,” a famous quote by physicist and mathematician Sir Isaac Newton, that quickly became the mantra for the first quarter of 2014. The prevailing factor behind the downturn in the crude tanker market was an overall decline in activity. Ultimately, this led to an increased oversupply situation, specifically in the VLCC segment.
Tankship Market Analysts Say Timing Essential for Success
Marine transport advisors McQuilling Services explain in a tanker industry note that timing is everything in a volatile tanker market. McQuilling explain that on the outset, one might not directly see a similarity between Valentine’s Day and the tanker market; however, both can sometimes require serendipitous timing in order for desired outcomes to transpire. Furthermore, just like the dating world, the tanker market is full of volatility. Industry participants have been reminded…
Tanker Lay-Up Report from McQuilling Services
One year ago we witnessed one of the highest tanker market earnings in the history of tanker shipping. Today the TD 1 trade returns about $500 / day in TCE earnings while there are about 50 large tankers employed as floating storage around the world. As these vessels re-join the fleet, on top of 38 VLCC and 33 Suezmax newbuildings expected to deliver before the end of the year, the markets may further deteriorate. In order to prevent possible future losses, and sometimes in hope to impact the markets, tanker owners engage in various fleet rationalization strategies. One of them is a possible vessel lay-up. There are two types of vessel lay-up: The hot lay-up is intended for a relatively short period of time while a cold lay-up is intended for an extended period of time.
Economic Effects of Pirate Attacks
McQuilling Services, LLC, marine transport advisors, released a message addressing the economic impact of pirate attacks on tankers. “The recent pirate attack on the VLCC Sirius Star – 319,430 dwt built 2008 – that took place offshore Kenyan coast, has implied a new magnitude of possible security impacts on the tanker shipping markets. An increasing threat from the Somali pirates is present in that region and the additional insurance premiums are being paid by the ship owners in order to transit the dangerous waters. However, the attack on Sirius Star stands-out from the rest because of the sheer size and value of the hijacked vessel which may propel various short term changes in the tanker marketplace in the near future.
