Tankship Oversupply May be Moderating: Analyst

By George Backwell
Monday, August 18, 2014
Current orderbook for tankers, 30,000 dwt & larger: Image courtesy of Poten & Partners

Slip...N’ Slide into better times but watch the rocks and grit says Poten & Partners of the global tanker order book in their latest 'Tanker Opinions'; but any rapid influx of tanker tonnage could seriously hinder the upside in earnings for the longer-term.

Although the Caribbean market for Aframaxes has taken a precipitous tumble this week, other tanker segments have maintained healthy spot rates suggesting that vessel oversupply could be moderating in the general sense.

A look at the current orderbook across all segments provides some insight as to what is still coming down the pike, but more curiously what has slipped or has fallen off the radar all together. Since ordering momentum continues, due in large part to a feeling that the market is coming off of cycle lows, the threat of vessel oversupply looms. However, the uptick in ton-mile demand could offset the incremental new tonnage supply in the near term.

The current orderbook for tankers, 30,000 deadweight and larger, is 66.1 million deadweight tons (mDWT) through 2017, (see Fig. 1 pictured here). What is the most interesting about these statistics, however, is not the incremental capacity that has been ordered this year, but that the reported new orders do not account for the differential between the January 2014 orderbook and that of today.

At the start of the year, the 2014 orderbook was 27.2 mDWT, the current orderbook is 15.9 mDWT and only 8.1 mDWT has reportedly delivered. This differential suggests that 3.3 mDWT, or 12%, of the originally reported orderbook is on a surface level unaccounted for.

The likely explanation is that these vessels have simply slipped into later years. Looking at the year-to-date delivery pace, this could explain for the majority of that differential. The bulk of the orderbook, 41% is made up of VLCC tonnage, the majority of which is currently slated to deliver in 2016.

As of the beginning of August 2014,, 11 VLCCs have been delivered of an initially expected 36. At this rate, the total deliveries for full year 2014 will be 20 vessels; 16 VLCCs have slipped forward, or been renegotiated and or cancelled.

On a sector-by-sector basis, a thorough review of credit risk from the shipowner and shipyard perspective can help to hone the view on the actual new supply expected. For example, speculation surrounding the ultimate deliverability of the Suezmax orderbook is a function of both shipyard capability and orderer of record.

Some schools of thought believe that the Suezmax orderbook is realistically only 55% of the 62 vessels reportedly on order, suggesting that widely reported orderbook numbers grossly overstate the reality of new tonnage supply in the next few years.

While shipyard statistics is sometimes a pseudoscience, shipowners are still cautioned not to over-do the ordering in the grander sense. Although, for many, it is still difficult to forget the glut of tonnage that has largely plagued the market for most of the past decade, group-think is a powerful force.

Today’s freight environment suggests the faint hope of light at the end of the tunnel, but any rapid influx of tonnage could seriously hinder the upside in earnings for the longer-term.

Source: Poten & Partners

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Neander Deal Sees Yanmar Return to Diesel Outboards

Marking its return to the diesel outboard market, engineering company Yanmar Marine International (YMI) has reached an agreement for exclusive distribution rights

3Si Group Launches Offshore Division

3Si Group, whose global portfolio of marine safety products and services covers commercial, leisure and military markets, has announced the formation of 3Si Offshore,

Canadian Frigates Get a Radar Upgrade

German navigation system manufacturer Raytheon Anschütz has completed factory acceptance tests and delivery of 12 sets of navigation radars for the Canadian Navy’s Halifax-class frigates.

Contracts

Ballast Water System Retrofits for 11 Containerships

Eleven container vessels owned by Bernhard Schulte GmbH & Co. KG, based in Germany, are to be retrofitted with Wärtsilä Aquarius Ballast Water Management Systems (BWMS), Wärtsilä announced today.

Timing in Doubt on Hapag-Lloyd IPO

German container shipping group Hapag-Lloyd has taken further steps in preparation of a stock market listing and has mandated more banks for the move, but it remains

Asia Tankers-VLCC Rates Will See More Volatility

VLCC market to be "hot" in Q4 -VLCC broker. Freight rates for very large crude carriers (VLCCs) face a roller-coaster ride on uncertain cargo volumes and vessel

Shipbuilding

Virginia-Class Submarine Named USS Iowa

Secretary of the Navy Ray Mabus hosted a ship-naming ceremony today in Ames, Iowa to announce that SSN 797, a Virginia-class attack submarine, will bear the name USS Iowa.

LaNaval Likely to Build Two LNG Fueled Ferries

Shipping company Baleària and Shipyard Construcciones Navales del Norte – LaNaval have reached this week an Agreement - expected to be firm in two months - for

Palmer Johnson Yatchs Shuts Sturgeon Bay, Moves to Europe

Luxury yacht manufacturer Palmer Johnson Yachts is closing its production facilities in Sturgeon Bay because of dwindling sales and competition from overseas.   In

Tanker Trends

Jotun, COSCO Celebrate 10,000th Antifouling Applications

In July, Jotun and Dalian Ocean Shipping Company (a wholly-owned subsidiary of China Ocean Shipping Company, Cosco Group), celebrated the 10,000th application of SeaQuantum,

Asia Tankers-VLCC Rates Will See More Volatility

VLCC market to be "hot" in Q4 -VLCC broker. Freight rates for very large crude carriers (VLCCs) face a roller-coaster ride on uncertain cargo volumes and vessel

Libya Plans to Sell Ex-rebel Tanker

Libya plans to sell a tanker that a former rebel group used in an attempt to bypass the Libyan government and export oil on its own last year, the Tripoli-based state prosecutor said on Thursday.

Finance

US Oil Drillers Cut Rigs as Crude Prices Collapse

U.S. energy firms cut 13 oil rigs for the first time in seven weeks, as a renewed slump in prices this summer forced drillers to make a second round of cut-backs.

Timing in Doubt on Hapag-Lloyd IPO

German container shipping group Hapag-Lloyd has taken further steps in preparation of a stock market listing and has mandated more banks for the move, but it remains

Asia Tankers-VLCC Rates Will See More Volatility

VLCC market to be "hot" in Q4 -VLCC broker. Freight rates for very large crude carriers (VLCCs) face a roller-coaster ride on uncertain cargo volumes and vessel

Consulting

ISS Appoints Holmes as VP, Cruise Solutions

Inchcape Shipping Services (ISS) said it is embarking on a plan to develop its cruise business with the appointment of Grant Holmes as Vice President, Cruise Solutions.

Dorian Acquires 2 ECO VLGC

Dorian LPG, an owner and operator of modern Very Large Gas Carriers ("VLGCs"), reported today that it has taken delivery of the ECO VLGC Commodore from Hyundai

Glosten Acquires Noise Control Engineering

Seattle-based naval architecture and marine engineering consultancy Glosten, Inc. has acquired Noise Control Engineering LLC (NCE), a consulting firm specializing in ship noise and vibration control.

 
 
Maritime Security Maritime Standards Navigation Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | 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: 0.2040 sec (5 req/sec)