Drewry: Crude Tanker Market to See Recovery in 2020

Image Courtesy: Tanker Investments

Recovery in the crude tanker shipping market is not expected until 2020 as weak trade growth and a bloated orderbook limit any rate recovery, shipping consultancy Drewry said.

The timing of recovery will depend on the extent of scrapping activity, is expected to gather momentum towards the end of 2017, once the International Maritime Organization’s (IMO) ballast water convention is implemented.

Since some owners might bring special surveys forward, the real impact of the IMO regulation will not be seen until 2018, according to Drewry.

In the existing fleet, there are about 20 million dwt of vessel capacity aged 19 years or more, for which the fifth special survey is due during 2017-22, all of which could be scrapped during the period, as unattractive freight rates, poor employability and the additional cost associated with complying with the regulations will force owners to scrap them.

Additionally, there are about 367 vessels of 67  million dwt for which the fourth special survey is due during 2017-22. As these vessels are currently in the age range of 14-19 years, owners will have to decide whether to scrap them before they are due for their next survey as the owners will have to incur the additional cost of fitting ballast water treatment systems (BWTS) as well as scrubbers required to comply with IMO regulations on sulphur limits.

If about a third of these vessels are demolished during the forecast period, the recovery in tanker freight rates will not start until after 2019. However, the extent of actual demolitions will be a crucial factor for deciding how quickly the market recovers.

“We expect the market to start a gradual recovery from 2020. For any recovery before 2020, demolitions need to be strong enough to keep fleet growth slower than demand growth,” Rajesh Verma, Drewry’s lead analyst for tanker shipping, said.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Jul 2017 >>
MTWTFSS
26 27 28 29 30 1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 1 2 3 4 5 6

Global Liner Shipping Asia Conference

Fight. Survive. Thrive. Respond to challenges of consolidation & disruption at the largest gathering of container shipping industry in Asia…

read more >

Bunkering Week 2017

IBC’s biennial Bunkering Week is back with its successful series of 3 co-located events: 8th Bunkering in Asia, 4th LNG Bunkering and EMTECH: Ship Emissions Technology Conference. With a proven track record of bringing together top decision makers from various industry sectors, this remains the go to event for ship owners, fuel suppliers, traders and […]

read more >

Indonesia Marine & Offshore Expo (IMOX) 2017

Indonesia Marine & Offshore Expo (IMOX) 2017, Batamis an international maritime and offshore industrial event that brings an international…

read more >

Salvage & Wreck Asia

Could your business be affected by shipwreck? Are you a salvage professional or a wreck removal expert? …

read more >