Aframax fleet expansion

The aframax tanker fleet segment (80,000-120,000 dwt) has enjoyed good spot markets in the period end 1999 to October 2001 and in the period November 2002 to August 2003. The market has been good due to increased non-OPEC oil production. Since August 2003 the spot charter rates in the North Sea have plummeted to levels not seen since October 1999, though rates in the Far East have held up a little better.

Average timecharter equivalent rates for Aframaxes (North Sea-UK Cont.) were USD 14,100/day in 1999, USD 43,700/day in 2000, USD 32,400/day in 2001, USD 20,000/day in 2002, and USD 33,700/day for the first 8 months of this year. However, the average rate for the whole of August 2003 was USD 9,700 per day, as was the average rate for the first few days of September.

The aframax fleet has been growing both in dwt and in numbers since 1992 with an average net annual fleet growth of 3.1% (by ship numbers, including Jan-Aug 2003). In 2002 and 2003 (first 8 months) the aframax fleet growth has been about 5%. This is the highest fleet growth of any segment in the period 1992 to 2003. The next highest fleet growth in the tanker sector is the VLCC fleet with an average annual growth of 1.1% in the same period. Data on the tanker fleet development can be downloaded from the INTERTANKO web site.

At end July 2003 about 27% of the existing aframax tanker fleet is still on order, making a total of 143 ships of 15.4 million dwt to be delivered. A similar proportion of the suezmax fleet is on order (28%) but for the VLCC fleet the figure is only 17%. In number of ships to be delivered the aframax orderbook is the largest with the exception of the smaller tankers (10,000-50,000 dwt). Data on the orderbook development can be downloaded from the INTERTANKO web site.

According to European phase-out requirements, there are some 68 Aframaxes to be phased out of European trading and removed from European flags this year, 14 next year, 10 in 2005, 2 in 2006 and 20 in 2007. These may, however, trade elsewhere until 2005. According to MARPOL, only 5 aframax tankers will be phased out this year. OPA 90 has yet another schedule: 45 existing aframax tankers have already been barred from the US, another 28 are due for barring in 2003 and 28 in 2004.

So far in 2003 we have recorded 20 Aframaxes sold for decommissioning, with an average age of 25.7 years and at an average price of $208 per ldt. Two of these were built in 1973 or earlier, i.e. they were due for phase-out in 2003 according to MARPOL. All but two were built in 1980 or earlier, which means they lost the right to trade to the US in 2003, according to OPA 90. (One of the pre-1980 built Aframaxes was an OBO with double bottom, which gives it five more years under OPA). Last year 25 Aframaxes of 78,570-108,550 dwt (including 3 OBOs) with an average age of 25.7 years were sold for decommissioning.