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Monday, September 24, 2018

Record contracting in 2006 puts pressure on single hulls

Some 49 m dwt of tankers have already been contracted this year, and the total for the year is likely to pass the last post-1970s peak in 2003 of 49.5 m dwt. 


It is undoubtedly the high freight rates that have stimulated contracting, with owners having good liquidity after a long period of good profitability. Time is also running out for single hull (SH) tankers. While it may be the perception that the final deadline for SH tankers is 2010, this may not always be the case.


There are some 96 m dwt of SH tankers (including DB/DS) still trading. 19 m dwt are set to phase out before 2010, and another 64 m dwt would phase out in 2010 - IF the provision to allow SH tankers entry after 2010 were in the end to be rejected by all countries – unlikely, in fact, because some countries are already saying that they will accept them. In addition, 13 DB/DS tankers can trade until the age of 25 years after 2010.


SH tankers may often be put near the end of the queue and have to accept lower freight rates than double hull (DH) tankers. But it is the contracting activity and actual deliveries up to 2010 that will ultimately decide how many SH tankers will be needed after 2010. 


The current orderbook of some 115 m dwt more than covers the 83 m dwt of SH tankers (excluding DB/DS) that may be phased out up to and during 2010 (see paragraph three above). Assuming that the demand for tankers will increase by 3% over the next 4 years, and assuming a tanker fleet today of 358 m dwt, another 45 m dwt would be needed to cover that demand increase. This means that 13 m dwt of the existing SH tanker tonnage would be needed to trade beyond 2010 - IF there were to be no more newbuilding orders.


ContactErik Ranheim