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Thursday, November 15, 2018

Owners will start the year in a strong position to meet the challenges ahead

Tanker owners have every reason to end the year in a cheerful mood. There has been record low pollution from tankers and a strong freight market. The tanker industry is performing well. 

The illustration below may look negative at first sight, but the average rates for 2005 have been strong despite the fall from the exceptional rates seen in 2004.

We end the year in a positive mood, with our members in a strong position to meet the challenges ahead.

Tanker owners have invested some USD 115 billion dollars in 271m dwt of modern tankers over the last 10 years. Over the same period 122m dwt of single hull tankers have been sold for decommissioning. However less than 5m dwt have been sold for decommissioning this year, but that is because so many old tankers have already been removed from the market in 2001-2003, and because rates remain firm. The average age of the fleet is on the way down from the peak of 15.3 years in 1999 to 11.7 today (that is including some U.S. Jones Act ships built 1940s to 1960s). The youngest segment is the VLCCs with an average age of 8.1 years. 

Average built tankers above 10,000 dwt


Average built

Average age

10-25,000 dwt



25-40,000 dwt



40-60,000 dwt


















Oil companies have been looking again at the benefit of longer-term relationships with the independent tanker owners, and despite the high freight market there has been quite a brisk period market with longer periods being discussed.  

The number of period contracts of more than six months has increased from 108 in 2003, to 143 in 2004 and 152 in 2006. The average period has increased from 2 years in 2003, to 2.4 years in 2004 and 2.9 years in 2005. In comparison, the average period in 2000 was only 1.4 years.  

The most active period charterer we have recorded in 2005 was the oil trader Glencore with 14 period contracts, Shell was 2nd with 11 and BP 3rd with 8 recorded period contracts of 6 months and more. ExxonMobil is running counter to the trend and we have only recorded one period contract with this oil company. The average rate of all period contracts recorded was USD 30,732, up from USD 26,203 in 2004.  The average age of tankers taken on period contracts was 5.1 years, down from 8.7 years in 2004.  Not only period contracts have increased. It also appears that that product tanker contracts of affreightment deals have increased.  

We trust that 2006 will be a prosperous New Year.

Contact: Erik Ranheim