Drewry: Tanker Rates Capped Out, Set to Weaken from 2016

Image Courtesy: Teekay

Tanker shipping rates are set to decline from current highs in 2016 with the forecast decline in crude oil trade due to ample stocking, and expected fleet expansion, according to the latest edition of Drewry’s Tanker Forecaster.

Tanker market enjoyed high freight rates due to the buoyant crude oil trade and a rise in floating storage.

This was despite a strong growth in the fleet, as many product tankers moved into the crude oil market. High rates in the tanker market continued to attract a number of swing chemical/oil carriers into the products trade, while a number of bigger product tankers moved into the crude trade to benefit from higher earnings, Drewry explains.

Stocking activity in both the crude and products sectors has increased substantially in recent times. This has led to a number of vessels serving as floating storage because land-based stowage was either full or too remote.

Newbuilding activity has also picked up strongly and Drewry expects the upsurge in deliveries and returning of vessels from floating storage to cap freight rates as tonnage utilisation rates decline with increased fleet supply.

“Vessel owners need to moderate newbuilding activity as sustained high ordering activity risks adversely affecting tanker vessel earnings over the next five years,” said Rajesh Verma, Drewry’s lead analyst for tanker shipping.

Firm tonnage demand and high floating storage will continue to support tanker freight rates in the near term. But fleet expansion on increased deliveries and the return of vessels from floating storage will start affecting tonnage utilisation rate from 2016, which will weaken freight rates.

“Looking further ahead, a decline in North American LTO capital expenditure and rig counts will lead to a recovery in US crude oil imports. This will provide a fillip to tonnage demand and push tonnage utilisation rates higher, offsetting the growth in fleet”, added Verma.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Feb 2018 >>
MTWTFSS
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 1 2 3 4

Shipping 360

This course is ideal for those who have recently joined the maritime sector and those who need to have a better understanding…

read more >

APM – ASIA PACIFIC MARITIME 2018

27 years in the making, APM is the premier shipbuilding & marine, workboat and offshore exhibition in Asia trusted by generations of industry professionals.

read more >

Shippax Ferry Conference 2018

The two-day onboard ferry conference was first organized in 2003 and grows ever more popular with some 400 delegates from over 40 ferry…

read more >

8th Dredging & Land Reclamation World Summit 2018

The 8th Dredging and Land Reclamation Summit 2018 will gather the decision makers from Authorities and Operators responsible for ports…

read more >