Product Tankship Demand & Overcapacity: An Industry Note

By George Backwell
Wednesday, June 18, 2014
Total Product Tanker Demand (Ton-Miles) 2000-13: Image McQuilling Services

Concern about oversupply only occurs when there are too many ships relative to demand, and in a recent 'Industry Note', McQuilling Services attempts to quantify the situation. A brief excerpt follows:

Much has been said about the product tanker market recently, mainly about tonnage supply.  More industry voices are speaking about their concern of over-ordering and too many ships.  However, the number of vessels on order and planned for delivery is really only half the story.  As long as there is enough demand, any number of ships on order may be acceptable.  Concern about oversupply only occurs when there are too many ships relative to demand.
 
In this note we look at product tanker demand to try to quantify the other half of the story.  As a starting point, it should be noted that there is no readily-available information to be had on tanker demand measured in ton-miles. 

Both historical and projected ton-mile demand data must be synthesized through many steps from basic trade data between countries. Even this data is spotty and somewhat dubious when looking at non-OECD bilateral country trade flows.  Perhaps this is why we don’t see a lot of detailed discussion on tanker ton-mile demand.
 
Our demand development process includes a regional grouping of the world which facilitates our tanker market forecasting methodology.  This grouping identifies 15 different regions where we track the seaborne movement of crude and refined products. 

To be sure, there are a number of assumptions required to do this, but in the end we account for all relevant seaborne trade in this way, across 225 distinct trades.

Conclusions
McQuilling's analysis of clean demand suggests that product tanker demand growth has undergone a dramatic shift downwards since 2010, driven by substantially reduced average trade lengths.  This conclusion is based on global trade data, and so accounts for all demand increases and decreases across 225 trade routes. 

Additional work on both geographic and temporal trade analysis is indicated to determine exactly where the declines have taken place.
 
It would also appear, given the magnitude of the product tanker orderbook that, relative to tanker supply, product tanker demand is not keeping up and the reason may be the negative influence on ton-miles that US Gulf exports seem to represent.

Source: McQuilling Services – Industry Note 14 – "Product Tankers: Truncated Trades Temper Ton-Miles" https://www.mcquilling.com/

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

People & Company News

Sapurakencana Wins 3 Petronas Oil blocks

SapuraKencana Petroleum Berhad today announced that it has entered into Sale and Purchase Agreements to acquire the entire interest of PETRONAS in 3 blocks offshore

Kemp Succeeds Semple at Wood Group

Wood Group announced following changes to its senior management team. Alan Semple, chief financial officer (CFO) has advised the board that he intends to

ST Engineering Rejigs Top Deck

Singapore Technologies Engineering Ltd (ST Engineering) today announced the appointment of senior management personnel to new key management positions in the

Tanker Trends

HMAS Success Deploys to Middle East

After months of preparation, HMAS Success departed Garden Island in Sydney today for a six-month deployment to the Middle East Region to provide logistic support

Rosneft Ships First Oil From Chayvo Field

Rosneft commenced shipment of crude oil extracted at the Northern Tip of Chayvo license off the coast of Sakhalin, with the first tanker carrying Sokol-grade crude leaving port on November 21.

Venezuela Ships First Crude Mixed with Algerian Oil to China

Venezuela is sending its first shipment of crude mixed with Algerian light oil to China, according to state oil company PDVSA and traders.   Venezuela recently

Fuels & Lubes

Environmental Groups: IMO Polar Code Too Weak

The International Maritime Organization (IMO) today adopted the Polar Code aimed at regulating shipping in Polar Regions. Several environmental groups have criticized

Cost to Fuel Ships Falls

For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as $1 million a year if current price level stay put. Assuming

Belgian Strike to Impact Antwerp Port

A strike in parts of Belgium on Monday is expected to disrupt rail services and one of Europe's largest ports as trade unions and workers voice their anger over

Logistics

ST Engineering Rejigs Top Deck

Singapore Technologies Engineering Ltd (ST Engineering) today announced the appointment of senior management personnel to new key management positions in the

October Imports up 9% at Port of Oakland

Containerized imports shipped through the Port of Oakland were up 9.17% in October from a year ago, the port said, citing the surge as the biggest jump in import cargo volume in six months.

Cost to Fuel Ships Falls

For a ship that burns 24 tonnes of fuel per day while steaming, fuel costs are reduced by as much as $1 million a year if current price level stay put. Assuming

Consulting

Kemp Succeeds Semple at Wood Group

Wood Group announced following changes to its senior management team. Alan Semple, chief financial officer (CFO) has advised the board that he intends to

Baker Hughes to Present at Wells Fargo's 2014 Energy Symposium

Baker Hughes Incorporated announced today that the Company's Vice President and Chief Strategy Officer, Derek Mathieson, will present at Wells Fargo's 2014 Energy Symposium on Wednesday,

EMGS to Map Brazil's Gas Hydrates

Electromagnetic Geoservices ASA (EMGS) has received a contract worth USD 1.5 million for a research project in Brazil. The project will use 3D EM data to map

 
 
Maritime Contracts Maritime Standards Naval Architecture Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair Shipbuilding / Vessel Construction Sonar
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: 0.1304 sec (8 req/sec)