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Tuesday, October 23, 2018

6% annual growth in the suezmax fleet

Suezmax tankers do not really live up to their name - only on average 11 per month passed through the Suez Canal in 2004, which was actually less than the number of VLCCs. However, suezmax transits through the Suez Canal increased from a monthly average of 5.6 in 2002, to 8.8 in 2003, 11 in 2004 and 12.7 in the three first months of 2005. 

Johan G. Olsen has recently published its suezmax fleet analysis, which includes information on the employment of the ships. The publication lists 322 existing ships (up 13 in 6 months and including 16 OBOs) and 69 newbuildings on order for delivery until 2007. With compulsory phase-out up to end 2007 of only 7 suezmaxes (see later for detail), that could mean net fleet growth of 62 units over 2.5 years.  

Oil majors or state-owned companies own 82 existing and 15 orderbook ships and in addition they control 62 tankers, which are on charter until 2007 and beyond. This means that independent owners own 75% of the suezmax fleet. Independent owners have 55 suezmaxes on order, 3 of which are fixed for 2007 and beyond.

The four oil majors, BPAmoco, ChevronTexaco, ExxonMobil and Shell, have a total fleet of 13 suezmaxes, plus 8 on period charter until 2007 or later. 

The biggest suezmax owner is Frontline with 28 suezmaxes, including 8 OBOs. The second biggest suezmax operator is General Maritime with 18; Knudsen OAS has 15 and OMI 13. The 6 owners with 10 tankers or more have a 33% market share; the 19 owners with 5-12 tankers each, totalling 149 ships plus 26 newbuildings, have nearly half the fleet; and the 23 owners with 5 tankers or more have a 64% market share. The remaining suezmaxes are split between some 70 owners. The biggest change in the suezmax ownership over the last 6 months resulted from the sale of the Ceres' fleet to Euronav, putting it at 7th in the suezmax league table with 9 suezmax tankers.

The average age of the suezmax fleet is 9 years. 3% were built in the 1970s, 13% in the 1980s, 46% in the 1990s, and 38% in this decade. 75% of the suezmax fleet are double hulled, 7% have double bottom or sides, which means that only 18% are single hulled.

Looking at the phase-out of suezmaxes, 4-7 of the trading suezmax fleet have already been barred from the U.S. (except dedicated lightering areas and LOOP) in accordance with OPA 90. There are none left that are due for MARPOL phase-out this year, then 4 are due in 2006 and 3 each year in the period 2007-2009. That makes a total of 13 suezmaxes totalling 2 m dwt due for phase-out before 2010 compared to an orderbook of 70 ships of 11.1 m dwt (Clarkson Shipyard Monitor May 2005).  

The number of suezmaxes being phased out in 2010 will be somewhere between 3 and 46, the higher figures occurring if there is no market for suezmaxes to trade until the age of 25 years old. Operators of single hull tankers need to obtain a positive response from both flag and port administrations to be allowed to trade their tankers until they are 25 years old after 2010. When the current orderbook is delivered, and if phase-out has been according to requirements, the fleet at the beginning of 2008 could amount to some 396 suezmaxes, which means that the fleet will increase by about 6% on average over this period. 

However, period employment continues to be fixed at an average rate of roughly one ship a week. We have recorded 26 suezmax period contracts of 6 months and longer since May 2004 and the typical rate has been some USD 30,000-40,000 per day with an average of USD 33,300 per day. The average period was 2.4 years. BP was the most active period charterer taking 5 suezmaxes for 6 months up to 3 year contracts over the last year.

For the first part of this year, suezmaxes and aframaxes have been faring better than other sizes compared to the same period in 2004, with average rates running at about 80% of last year's level. The rates more recently, however, have been considerably above the rates at the same time in 2004. An important positive factor for suezmaxes has been the increasing imports into the U.S. A slow down in exports from the Former Soviet Union (FSU) may have a negative effect on this sector.

 Contact: Erik Ranheim