Frontline CEO: More Scrapping Needed to Lift Rates

Image Courtesy: Frontline

The second half of 2018 may see a rise in freight rates for oil tankers as owners are expected to speed up their demolition of older tonnage, Frontline CEO Robert Hvide Macleod is quoted as saying by Reuters.

According to Macleod, the market strengthening is not likely in the short-term, “even though the current weakness at the start of the winter season is surprising.”

Poor earnings have been the key driver of tanker demolition over the past year.

Data from Clarksons shows that demolition volumes in the tanker sector surged from around 2.3 million dwt in 2016, to 95 vessels of 9.5 million dwt in the year to date.

Going forward, if owners want to see a pick-up in rates the time has come to remove the less efficient vessels from their fleets.

“If oil demand grows as expected, the tanker market in the second half of 2018 will be interesting. And faster if scrapping were to increase significantly,” Macleod said.

However, attractive pricing of new ships has seen owners flock to the yards this year, further adding to the excessive tonnage, which is likely to prevent market recovery.

The ordering of tanker newbuilding has increased year to date by 17 percent when compared to 2016, according to Intermodal.

Hopes of a market recovery are further shattered by the shipping consultancy Drewry, which forecasts a further drop in freight rates in 2018 amid an expected slowdown in China’s crude stocking activity.

Although tonnage supply growth in the crude tanker market is expected to come down to 3.2 percent in 2018 after surging by close to 6 percent each year in 2016 and 2017, this will not be enough to push tonnage utilisation rates higher as demand growth is expected to be sluggish, Drewry said in November.

World Maritime News Staff


Share this article

Follow World Maritime News

In Depth>


<< May 2018 >>
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

The 27th World Gas Conference

The 27th World Gas Conference is the leading global industry event and is the definitive gathering of influential leaders, buyers and sellers, policy-makers and experts from around the world.

You will hear critical business insights and lively debates on the most topical issues facing the global gas industry today and in the future.

From 25-29 June 2018, Washington DC is expected to host 12,000 attendees, 500 speakers and 350 exhibitors representing, more than 600 companies from 100 countries.

Presented by the IGU, this is the largest and most high-profile gas event that is conducted by the industry for the industry.

Read More

read more >

Europort 2018

From 15-17 May 2018, the 12th edition of Europort Romania willl take place in the IDU Hall in Constanta…

read more >


The BlueWeek2018 will be held on 28-29-30 May in Rotterdam, under the auspices of the Blue Forum…

read more >

Posidonia 2018

Posidonia, the international shipping exhibition, has long been established as one of the major calendar events…

read more >