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Thursday, September 20, 2018

Highlights from Washington Tanker Event 2003

In addition to the article below, summaries from the Open Sessions together with links to the presentations are now available on our website under "Washington Tanker Event 2003"

Open Market Session – “Coping with unpredictability”  

Chaired by Michael Tusiani, Poten & Partners, the Open Market Session on 8 April entitled ‘Coping with unpredictability’ covered i.a. geopolitical risk, economic malaise, impending regulatory change and how owners and charterers could prepare themselves for these uncertain times.

The Chairman in his opening remarks referred to a recent poll on shipowners conducted among a cross-section of representative American, European, and Asian high school students.  Over 65% believed shipowners were billionaires, 70% that they worked less than 20 hours per week, and 80% that shipowners conducted their business from home or while cruising on their yachts.  This survey was of high school student so it might not reflect the views of the average population but  “despite this amazing perception of our industry, we all know that to be successful in shipping is not an easy task,” he said.

Joseph Stanislaw, Cambridge Energy Research Associates (CERA) talked about finding the right balance between on the one hand  “one world” globalization with cultural homogenisation and on the other isolationism where the world is divided into conflicting spheres of influence with little or no cultural or economic exchange. He described this balance as globality, where there is a global economic engagement but respect for local culture, religion, national identity and the environment. Mr Stanislaw explained that globality encouraged economic and political openness as well as cultural and religious diversity and environmental sustainability. The final test for globality was improved living standards.

Robert P. Curt, ExxonMobil Marine Transportation said that “rigorous vetting reduces unpredictable events”.  ExxonMobil had a chartering coverage strategy based on a mix of term and spot tonnage that enabled them to cope with unpredictable events. They had increased the number of vessel screenings from 2,000 in 1984 to 80,000 in 2002.  Mr. Curt ended by posing the question: “The next unpredictable event – will the industry be ready?”

Lois Gerhold, Braemar Seascope Ltd showed graphs illustrating the proportion of tankers with single hull, with double hull, and on order for each segment.  In her conclusion Ms Gerhold, among other things, focused on the high deliveries and lack of old MR size product and Suezmax tankers and the increase in oil demand not translating into increased tanker demand. She said that product tanker demand was likely to rise.

Nancy Yamaguchi, Trans-Energy Research Associates Inc talked about clean and dirty product trades in the US, Asia, and the Middle East.  Dr Yamaguchi said that volatility remained in Asia, yet demand was recovering, and trade patterns were shifting. She concluded by saying that volatility in oil demand and output naturally caused volatility in trade and shipping. The Asian markets that had slumped appeared to be recovering, but imports would rise little in the near-term. The US market would be flat in the near-term, but a major growth in imports was expected in the coming decade (clean growth, dirty growth then stagnation). Mid-East clean exports would grow dramatically, and would include high-quality fuels destined for Europe and the US, that would require modern double-hulled tonnage

Erik Ranheim, INTERTANKO said the current situation in the tanker market had to a great extent been created by the political influences: in Venezuela, in connection with the Iraqi situation and in the aftermath of the Prestige incident. Normally political situations created turning points on the demand side, but post-Prestige events had had a strong impact on the supply side, and a third phase-out scheme seemed likely to be implemented. Mr Ranheim showed the consequences of the various phase-out schemes. The market would be more vulnerable to downturn with a modern fleet, as there would be no backlog of old ships that could be sold for recycling.

Adrian McMahon, Stelmar Tankers (UK) Ltd in summing up the speakers’ presentations questioned whether a two-year cycle of good times would necessarily be followed by a protracted period of depressed rates. Up to nine months ago, rates were depressed because the tanker market was keyed to supply and demand in a world where the trade routes were reasonably stable. This was certainly not true any longer and he asked whether disruptions to the status quo would be frequent enough to prevent a return to stability of crude volumes on key trade routes.

Geographic restrictions on the use of double-hulled tankers could lead to a situation where employment of single-hulled tankers was limited to selected  ports. This could spur other nations into passing legislation, resulting in a more rapid phase-out of single-hulled tankers. This had the potential of generating a shortage of shipping capacity to move the world’s cargoes - notwithstanding the large orderbook. Having double-hulled tankers was only one side of the coin. Of equal importance was the other side: quality operations. Current EU legislative proposals seemed to be dealing with only one side.

A more extensive report can be found on our web site under the Washington Tanker Event pages.

Contact: Erik Ranheim


Open Session ‘In the Aftermath of Prestige’

Chaired by Jim Lawrence, MTI Network (USA) Inc this session yielded four key themes: presentation of facts of the incident, political reactions, media response and general risk management.

Click here to find a summary and presentations on our web pages.


Open Session ‘Newbuilding Standards – is time ripe for a change?’

Chaired by Nikos Mikelis, Paralos Maritime Corporation this session focused on newbuilding standards and whether industry was prepared to pay extra for robust ships built to new and better Class standards. 

Click here to find a summary and presentations on our web pages.


Open Session ‘Tankers – Your Energy Link’

Chaired by Stephen Van Dyck, Maritrans Operating Company this session addressed  the tanker industry and its association with the world's energy supplies and demands.

Click here to find a summary and presentations on our web pages 

Open Session ‘Tanker Safety in US Waters’

Chaired by Jonathan Benner, Troutman Sanders LLP the session focused on the overall safety of tankers trading in US waters, and pollution prevention.

Click here to find a summary and presentations on our web pages


Open Session ‘Maritime Security’

Chaired by James McGregor, Ocean Ships Inc topics included LISCR’s Practical Guide to Implementation of the ISPS Code, the practical obstacles to meeting the new security requirements by 1 July 2004, API’s contribution to a security regime for the protection of docks, refineries and related infrastructure, a methodology for the CSO, SSO and PFSO compliance processes and terror insurance issues

Click here to find a summary and presentations on our web pages