Drewry: Ordering Spree Could Lead to Tanker Market’s Ruin

A steep rise in vessel orders risks bringing the recent bonanza in oil tanker shipping to an abrupt end, according to the latest edition of Drewry’s Tanker Forecaster.

Following recent modest growth, the oil tanker fleet is expected to reach new heights by 2016, climbing to 371 million dwt, Drewry estimates.

In 2014 fleet growth was flat, inching up just 0.6% as deliveries slumped 38% to 9.1 million dwt and demolitions remained high. But capacity expansion is gathering momentum and is expected to reach annual growth of over 4% in 2016, on the back of brisk vessel ordering which reached 22 million dwt last year.

Drewry believes that the driving force behind this resurgence in ship orders has been rocketing cargo demand, particularly floating storage, following the recent collapse in oil prices, coupled with moderating fleet growth. This has propelled spot rates to very high levels, with Drewry’s Tanker Earnings Index reaching 323.5 in January, its highest level since 2009.

“Notwithstanding the recent spike in demand, the primary driver of freight rate and earnings recovery in tanker shipping has been the decline in fleet growth,”said Rajesh Verma, Drewry’s tanker shipping lead analyst. “And if current ordering persists it will prove the sector’s ruin.”

Orders have been particularly strong in the VLCC segment on the back of growing trade on long voyage routes. The shipping consultancy pointed out that the impact on capacity growth could prove particularly acute given the anticipated decline in demolition activity as the tanker fleet is now younger.

“However, the short term outlook remains very positive with modest fleet supply growth and strong cargo demand anticipated for 2015, which are expected to push tonnage utilisation higher still, “ added Verma. “With bunker prices projected to remain low we expect tanker operators to make the most of a buoyant market, for the moment at least.”

Share this article

Follow World Maritime News

In Depth>

Events>

<< Feb 2020 >>
MTWTFSS
27 28 29 30 31 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 1

The 9th Annual Event Green Shiptech China Congress 2020

The 9th Annual Event- Green Shiptech China Congress 2020 will be held on next…

read more >

Belgian Offshore Days 2020

During this event, a conference will be held with focus on “Increasing value by data driven innovation…

read more >

7th Annual Arctic Exchange

Every year the Exchange invites delegates from across the globe to come together to listen to key senior management teams…

read more >

World Future Ports Summit 2020

This event will bring together ports and maritime shipping professionals from global leading companies and authorities to discuss recent digital technologies…

read more >