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Monday, December 11, 2017

It is not enough to count ships and tonne miles

In its new tanker review, Fearnleys calculates, based on the tracking of tankers, an increase of 3% in crude tanker trade in 2006 in tonne miles, compared to an increase of 5% in 2005. The estimated increase in the product tanker trade is 5% in 2006 compared to 8.9% in 2005.

 

The increase in the fleet is calculated to be 6.9% compared to 5.5% in 2005. Despite the stronger increase in the fleet than in the trade, rates remained fairly steady.

 

Erik Andersen at R.S. Platou explains this by pointing to four factors that have contributed to a tighter supply than that indicated by the fleet fundamentals:

 

1.                      In the summer of 2006, in particular the Iranians used tankers for temporary floating storage.

2.                      There was an increased technical off-hire due to longer drydockings. The latter has been confirmed by some INTERTANKO members. We would appreciate reports from any members that extended drydockings or other information that could shed some light on longer technical offhire

3.                      There was a reduction in supply due to slow steaming of some single hull tankers in order to optimise speed given the higher bunker prices. For example, a speed reduction for single hull tankers from 14.0 to 13.5 knots leads to a demand growth for the total tanker fleet of one percent.

4.                      The two-tier market and longer waiting time for single hull tankers to obtain cargoes also contributed to a tighter market.

 

Some of these factors continue into 2007, and the current strong market shows that it is not enough simply to count ships and tonne-miles.

 

Contact: Erik Ranheim