he latest bullish report comes from Castor Group in the US, who forecasts vessel supply destruction for large crude tankers to be among the largest ever recorded in the coming few years, second only to the period following the re-opening of the Suez Canal in 1976.
“Obsolete tonnage will not be replaced in the foreseeable future by new buildings as the last few years’ skyrocketing costs and the lack of feasible alternative fuel technologies have caused the longest hiatus of newbuilding orders in almost 40 years,” Castor analysts noted.
A structural bull market lasts for a long time and provides for a time tested and profitable investment strategy
Castor data suggests that at the end of 2025, almost 25% of current aframax supply will be lost. Moreover, in only one year’s time, the VLCC sector is expected to shed 6% of its vessel supply, while the Suezmax sector will lose almost 9% of its tonnage capacity.
The Ukrainian war has caused significant changes in trade patterns in all three crude sectors, resulting in large increases in vessel demand. Since early June, volumes in the VLCC sector are ahead 33.3% and actual vessel demand has risen 30%, according to Castor. The fleet has also become significantly more geographically fractured which in conjunction with higher vessel demand, have pushed earnings almost $35,000 per day higher. During the same time, global suezmax vessel demand has jumped 20% with increases recorded in most export regions. Geographical fragmentation of the fleet has also provided support for higher earnings. Aframax vessel demand rose almost 24% during the same time with the vast majority of increases recorded in the West.
Tankers, Castor argued, are in the early stages of a structural bull market.
“While no bull market follows a straight linear path higher, a structural bull market lasts for a long time and provides for a time tested and profitable investment strategy; buy dips,” Castor advised.
In a widely read recent report entitled ‘Medium-term tanker fleet fundamentals to support a golden age’, brokers BRS looked at the low tanker orderbook, something it said was down to a combination of a tanker market in the doldrums, technological uncertainty and high shipbuilding prices.
“It is becoming extremely difficult for an owner to today place a tanker order at a shipyard with a proven track record for building tankers, for delivery before 4Q25,” BRS stated, predicting that this should see the VLCC fleet contract by 1-2% per annum over 2024-26.
Joakim Hannisdahl, who oversees the Cleaves Shipping Fund, wrote earlier this week of the start of the long-awaited cyclical expansion in oil tankers.
“We now see a dual positive effect on tanker demand due to implications from the invasion and from a general improvement in global oil supply,” Hannisdahl wrote, going on to discuss the very low orderbook.
Norwegian bank DNB has also turned bullish. In a report issued at the end of last month, DNB stated it saw considerable upside potential for many of the tanker stocks it covers.
“As the earnings inflection point appears to be nearing, we have upgraded most of them to buy,” DNB stated.
“We find all-time low orderbook-to-fleet ratios of 5.1% for crude tankers and 4.7% for product tankers, versus high average fleet ages of 11.3 years and 12.1 years, respectively. Against a tightening regulatory backdrop and higher fuel costs, this should offset part of the already limited deliveries and we forecast 2.9% average supply growth for crude tankers and 3.1% for product for 2022–2025e,” the DNB report forecasted.
DNB’s rate forecasts have been substantially upgraded and now stand at $41,400 a day for 2023, $54,400 a day for 2024 and $60,700 a day for 2025 for VLCCs and $23,600 a day, $26,500 a day and $26,800 a day for modern MRs, respectively.
Based on these rate estimates, DNB sees a 13% upside potential to average secondhand VLCC values one year forward, with a five-year old VLCC valued at $93m versus today’s quote of $82m. For MRs, DNB sees 18% upside potential on average, and values a five-year old at $40m one year forward – 20% above the $33.5m current broker quote.
VLCC newbuilding prices have increased from $88.4m in January 2021, to $119m, an increase of 35%, according to the New York-based tanker broker Poten & Partners. Secondhand prices have shown a similar trend. The last time asset prices increased like that was during the tanker supercycle from 2004 to 2008.
So far, newbuilding prices have increased faster than secondhand values in the current cycle. However, Poten argued in its most recent weekly report that this will likely change if rates continue to recover.
Talking changing tanker prospects yesterday was Hugo De Stoop, the boss of Euronav, one of the world’s largest tanker players. Unveiling Q2 results, De Stoop discussed the ongoing counter-seasonal recovery in the markets
“Recent trading data points – such as China’s return to crude procurement, vessel supply metrics and improved oil supply – have underpinned a recovery in the freight markets which is unusual for the season. Euronav is ideally placed to benefit from the shorter-term cyclical recovery but also the robust medium-term fundamentals of our market,” De Stoop said.
The counter-seasonal run comes despite falling demand in key market, the US.
“Demand destruction is by now a reality in much of the Western world, most visibly witnessed in the US with the Energy Information Administration releasing figures showing implied demand for gasoline plunging by 7% last week to just over 8.5m barrels per day, around 11% under the five-year average for this time of the year, even as prices at the pump are coming off fast,” a markets update from Norwegian broker Lorentzen & Co today stated.
However, there are wide differences between the Western Hemisphere and the European continent, propping up the tanker markets, both for crude and products.
“While the US is seeing plenty of extra crude as a result of refineries accepting lesser volumes amidst higher domestic production and releases of the Strategic Petroleum Reserves, Europe is more hungry than ever for supplies, not only for crude but also for distillates,” analysts at Lorentzen & Co pointed out.
Global coatings pioneer Nippon Paint Marine has added a new anti-corrosive universal primer to its E-Marine range of paints.
E-Marine 2000 is the Japan-headquartered company’s first general-purpose epoxy primer manufactured in China for the Chinese newbuilding market.
While the universal primer is suitable for application to all areas of a newbuild ship, such as the underwater hull, boot tops, topsides, decks and cargo holds, it has been specially formulated to meet market demand for a MSC.215(82)-compliant preparatory primer. The IMO resolution, adopted in 2006, governs the performance standards for protective coatings (PSPC) for ships’ ballast tanks.
Taking two years to develop the formulation, E-Marine 2000, available in grey, red or cream, is an abrasion-resistant, high-volume, epoxy coating with an 80% solid content and capable of providing long-term corrosion protection.
For ballast water tanks, the required nominal dry film thickness of 320µm can be achieved in two coats but for other parts of ships a range of film thicknesses can be applied in one coat. E-Marine 2000 has a minimum and maximum dry film thickness of 80µm and 1800µm respectively.
Gerald Mao, Senior Director, Nippon Paint Marine (Shanghai), said: “A general purpose, universal primer is a key priority for shipyards as a primer that can be applied to all parts of ship – including ballast water tanks – offers significant commercial technical advantages. As this anti-corrosion paint has been certified for use as a ballast tank coating, more than 70% of a newbuild’s undercoat requirement can be met with just one system.”
Another key benefit, compared to other primers in the marine marketplace, is its curing and short coating interval time. Depending on the temperature, a full cure can be achieved in seven days.
A low temperature version of the primer, E-Marine 2000 LT, is also available for application in ambient temperatures between -5°C and 10°C. At 0°C a full cure can be achieved within 18 days.
Since its market introduction last year, more than 640,000 litres of E-Marine 2000 and E-Marine 2000 LT have been ordered from Chinese shipyards for 26 newbuilds scheduled for delivery in 2023 and 2024. These include 15 bulk carriers,11 PCTCs, four 7000TEU containerships and a 6300m3-capacity LPG carrier.
With Greece’s maritime history stretching back thousands of years, it seems fitting that the quote that comes to describe my experiences in naval architecture is from the Greek philosopher, Heraclitus; ‘Change is the only constant in life.’ In fact, embracing change for the future safety and efficiency of the maritime industry was an essential driver for the creation of RINA in 1860, and for its predecessor, the Society for the Improvement of Naval Architecture in 1791. Engineers succeed by applying learnings from the past so they become lessons about the future, assisted by healthy doses of curiosity and creativity. Today, RINA’s mission is ‘to promote and facilitate the exchange of technical and scientific information, thereby to improve the design of vessels’, and I really believe that it’s as relevant today as it was when the Institution was founded.
Looking back at my first job, I realise that I witnessed the effects of rapid technological change at first hand. I served on a hydrographic vessel and really enjoyed draughting admiralty charts and manually working the echo sets, which were busy etching into carbon paper. It felt like one day I was collating oceanographic data for the hydrographic office, then overnight the process was automated and many aspects of my job were suddenly redundant. Further change was imminent, but at the time I was not concerned about Moore’s law, the digital revolution, or the advancement of autonomy, as I navigated my career path. I knew my experience was adaptable to new situations; I still believe there will always be a need for human intervention in the maritime industry, even if it may be in tandem with increased assistance from digital systems.
Now, we are taking remarkable steps towards sustainability and net-zero 2030/2050 targets and assessing the impacts of autonomy and AI. As engineers, we embrace the challenges ahead, as we have done in the past when developing construction materials, fuel, and propulsion systems. Our challenge is exciting, perhaps daunting; but that’s precisely why I decided on a career in naval architecture.
So, how can modern Naval Architects meet the challenge, and why do they need a professional body? RINA recognises that to tackle the challenges ahead, we must update our communication systems and digital tools, invest in people, training, and resources to proactively support everyone working in the wide variety of maritime sub-sectors, from Defence to Offshore Wind to Shipping to Yachts to STEM projects, and everything in between. Collectively, we understand the benefits of an independent knowledge centre providing the benchmark for research, debate, and learning. In addition, my focus is offering transparency, captivation, and engagement through a clear roadmap to demonstrate why an engineer should engage with the Institution.
Our committees and working groups are the place where the Institution fosters the relationship between industry and academic partners to discuss maritime safety, innovation and environmental issues with peers and fellow colleagues in an independent, open, and dynamic forum. There is something for everyone, either by engaging in training or technical seminars, presenting a paper, or getting involved in many of our programs. The benefits of continuous professional development and maintaining one’s career path, combined with networking, serve to improve communication, drive collaboration, and discuss the ideas we all must foster for our own innovation and thought leadership.
Some of the changes we see affecting our industry have been unpredictable. The Institution supports those who have struggled through the pandemic. We understand some students and younger engineers may have felt isolated, requiring the support of a mentor or ‘buddy’ system, and we have seen members step up to help.
Finally, what are the skills and capabilities of the modern Naval Architect? For me, the critical path remains the same. We must provide visioneering. Our inquisitive nature will drive innovation, but the speed of change is upon us. I consider myself a systems integrator, but I don’t feel that’s radically different from my work in some of the earlier roles in my career. As Naval Architects, it’s our responsibility to remain modern, up-to-date and forward-looking. The credibility of the maritime industry depends on it.
The BunkerMetric acquisition will provide another key metric in StormGeo’s software-based voyage decision support services, based primarily on weather intelligence.
BunkerMetric’s procurement optimisation tool will now become a subscription service within StormGeo’s existing s-Suite, a service that includes voyage planning, route optimisation, and fleet performance management.
Software developed by BunkerMetric will enable fuel variables to be taken into account, including ports, prices, volumes, and fuel grades. Shipping companies will be able to minimise costs while considering other variables such as operational, commercial, and environmental factors, Alfa Laval said.
BunkerMetric CEO, Christian Plum, who set up the company five years ago, declared: “Combining BunkerMetric’s state-of-the-art optimisation algorithms and data platforms with StormGeo’s cutting-edge data science will mean valuable synergies for existing and future customers.”
Soeren Andersen, StormGeo CEO, commented: “BunkerMetric’s advanced procurement optimisation tool is a welcomed addition to our route advisory services, giving shipping customers timely data for choosing the best bunkering options. It will help optimise scheduling, fuel, and voyage performance.”
China began live firing exercises at 12 noon, local time, on Thursday in response to the visit to Taiwan by US Speaker Nancy Pelosi, including the firing of ballistic missiles.
Taiwan’s Maritime and Port Bureau was reported by Reuters to have advised ships to find alternative routes avoiding the areas where China has announced it will be holding drills until Sunday. China has declared six exclusion zones around the island three of which come within 12 km of the Taiwanese coast, and Beijing is reported to have warned shipping and aviation to avoid these areas.
The island’s two largest port’s Kaohsiung and Taipei port sit at the Southeast and Northeast of the Strait respectively. Kaohsiung ranked as the world’s 15th largest container port in 2020 according to figures published the World Shipping Council (WSC). P&I insurer Gard in an update to members noted that some of the six exclusion zones were close to port areas, “such as Area 6 which is approximately 15nm from entrance to the busy Kaohsiung port”.
The P&I club advised vessels in entering the region to amend voyage plabs to avoid entering the exclusion zones, and if headed to ports in Taiwan contact local agents for updates.
According to VesselsValue as of 3 August there were 256 containerships, tankers, and bulkers in Taiwanese territorial waters, with a further 60 estimated to arrive before the conclusion of the drills on Sunday.
The Strait is also a major traffic route for vessels sailing between Southeast and Northeast Asia and beyond with 48% of the world’s container shipping fleet reported to have transited the waterway in the first seven months of the year according to data compiled by Bloomberg.
Ships can divert to the east of Taiwan via the Philippines Sea, however, June – September is also the peak of the typhoon season in the Philippines. Container xChange quoted a customer in Taiwan as saying the diversion would add an extra few days to containerised voyages.
According to the latest Sea-Intelligence Global Liner Performance (GLP) report, reliability figures in June 2022 mark the first time since the start of the pandemic that schedule reliability has improved year-on-year, albeit by just 0.5%.
The latest figure compares to an all-time low of 30.4% in January 2022 and a recent high of 83.5% in June 2019.
As noted in its recent second quarter results, Maersk was the most reliable of the container lines with schedule reliability at 49.5%, followed by Hamburg Süd at 41.4% and ten carriers in the 30%-40% range. Yan Ming and Wan Hai both trailed at 24.8% and 29.2%, respectively.
The report also tracked average delays for late vessels another indicator which has improved in the course of the first six months. Average delays for late vessels were at their worst in January 2022 at 9.95 days, but recovered to 6.24 days in May 2022 and held at the same point into June; average delays for late vessels were an improvement on the 6.54 days recorded in June 2021.
The Sea-Intelligence figures are built from data across 34 different trade lanes and 60+ carriers.
Quoting Sea-Intelligence data, Xeneta said that in the three months to July 24, capacity between Asia and the US East Coast was up 18.9% on-year to an average of 210,000 teu.
“Compared to the average weekly capacity in the same period last year, this is the equivalent of adding four 8 750 teu ships a week,” said Xeneta.
Asia-US West Coast capacity eased over the period, but remained the larger trade by far. In the same three-month period, Asia-West Coast capacity averaged 310,000 teu, down 1.7%.
The shift between the coasts was driven by significant delays and queues at US West Coast ports, but the problem was not solved, it just moved. Schedule reliability fell on the US East Coast with just 18.7% of services running on time in June with average delays of nine days for those arriving late, while on the West Coast, reliability improved to 24.8% in June with average delays of 9.9 days.
The latest data confirms that of the McCown report in July, which noted an Eastward shift in queues and delays on the US international container trades.
The shift of capacity means that 61.3% of Asia-US boxes came by the West Coast in the 12 weeks to July 24 2022, down from 66.1% at the end of the same period in 2021.
Data from May 2022 showed US East Coast imports up 11.9% year to date compared to 2021, and up 7.3% in May alone.
“As many of these containers have been moved away from the West Coast to the East Coast, there has been a corresponding drop in volumes imported through the US West Coast from the Far East. These are down 8.0% year to date and were down by 12.8% in May alone compared to May 2021. Total imports from the Far East to North America have risen 0.9% year to date,” said Xeneta.
To further improve regional bulk cargo management efficiency and strengthen competitiveness, the group consolidates the operation for China Merchants Port Service and Chiwan Port and set up the South China Bulk Cargo Management Center.
Bulk cargo business plays vital role in China Merchants Port’s development. The integrated development of bulk cargo business in South China is a major strategic deployment of the group, commented Wang Xiufeng, CEO of China Merchants Port.
With the foundation of South China Bulk Cargo Management Center, it will accelerate the consolidation of local bulk cargo resources and actively expand new business opportunities, including cold chain projects for No.1 – No.3 berths at Chiwan, grain depot projects for No.4 – No.6 berths, and other related extension projects.
The South China Bulk Cargo Management Center operates 16 bulk cargo berth and eight container berths.
ONE, along with affiliates of Fairfax Financial Holdings, the Washington Family, and David Sokol, Chair of Atlas, have formed Poseidon Acquisition Corp, which has made an offer to acquire all outstanding shares in NYSE-listed Atlas.
Poseidon is offering $14.45 per share, Fairfax, Washington and Sokol, together control approximately 68% of Atlas’ common shares.
The world’s largest, independent, containership tonnage providers Seaspan is wholly-owned by Atlas.
David Sokol, Chairman of the Board of Directors and member of the consortium stated: “The consortium believes the proposed transaction will provide Atlas’s common shareholders with immediate liquidity and certainty of value at a significant premium to the current share price, while allowing Atlas to focus on the long term without the emphasis on short-term results and providing Atlas with an ideal strategic partner to support its future growth.”
As part of the bidding consortium ONE said: “ONE will be negotiating with Atlas as part of the consortium.”
The offer represents 32.1% and 28.8% premium over the 30 day and 60 day average closing prices of the Company’s common shares of $10.94 and $11.22, respectively.
As of end March 2022 Seaspan’s operating fleet consisted of 132 vessels with a total capacity of 1.15m teu, and an additional 67 newbuildings on order. Capacity of existing vessels and newbuildings totals 1.96m teu, not including four 7,700 teu vessels ordered in May this year. The newbuilding programme is fully financed.
The company names 17 charterers on its website including all the six largest container lines in the world – Maersk, MSC, CMA CGM, Cosco, Hapag-Lloyd, and ONE.
Atlas is expected to form a special committee of independent directors to review the offer and accept, reject or negotiate terms with the bidder.
The rate of growth was fairly consistent with the 5.9% volumes increase seen in early July.
Export container volume grew 7.3% while the domestic volume increased 2.3% in mid-July. Among which, the port of Dalian posted a growth rate of 30.3%.
Cargo throughput at major coastal hub ports increased 4.3% year-on-year while the international trade cargo throughput rose 5.9%.
Crude oil shipments at major coastal ports dropped 1.9% during the period of mid-July due to the continued price shocks in global crude oil market. However, the port of Dalian posted a substantial growth rate of 164.5%.
Metal ore shipments at major Chinese ports further improved and achieved an increase of 24.2%.
In mid-July, cargo throughput and container volume at three major Yangtze River ports, Nanjing, Wuhan and Chongqing increased 11.2% and 2.8% year-on-year, respectively.
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy
Privacy Overview
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
