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Monday, June 18, 2018

AGE MINIMIZATION!

According to Poten & Partners, the Erika effect can be looked at as a voluntary diminution of supply in terms of charterers’ preferences. Chartering managers are playing a major role in reducing available supply by age minimization rather than cost minimization.

If Freddy Cheng had survived another six months, he might still be in control of Golden Ocean. As in real estate where the three most important determinants of success is location, location, and location; in tankers, it’s timing, timing, and timing.

Poten & Partners says that MARPOL mandatory phase out is involuntary diminution of supply, particularly for VLCCs and Suezmax tankers. In year 2000, 59 VLCCs (14% of the fleet) and 32 Suezmax tankers  (10% of the fleet) either reach their 25th anniversary or have already done so. Unless operated with HBL, these vessels cannot trade and will be scrapped. If charterers do opt for HBL in any meaningful way, they will be in apparent conflict with the current policy of age minimization.

At the same time the supply/demand situation is tight and oil stocks low, this leaves charterers with little flexibility and tanker operators with a clear upper hand in the market for a change.  Considering all the years tanker operators have been subsidising oil prices and the dreadful year in 1999, it is no wonder that tanker operators are taking full advantage of this situation