Tanker fleets gets a better balance

IN THE FAIRWAY

FLEETS • SEVERAL YEARS OF WEAK EARNING HAVE LED TO CONSOLIDATION IN THE CHEMICAL TANKER SECTOR AND A SHARP REDUCTION IN NEWBUILDING CONTRACTS

THIS YEAR’S ANNUAL review of chemical tanker fleets, which appears on the following pages, shows a number of significant differences from that published by HCB last year (April 2018, page 40). One of the most glaring changes is the sharp reduction in tonnage figures listed in the column headed ‘newbuildings on order’. Less obvious, but still as significant, is the fact that this year’s listing runs somewhat shorter than last years, following consolidation among fleet operators over the past year.

HCB headlined last year’s survey ‘Irrational behaviour’. The orderbook had stayed high for too long, despite a complete absence of an indication of a market upturn and, with earnings in the clean product (CPP) trades also low, a lot of swing tonnage was operating in the vegoil and chemical markets, resulting in a massive over-supply of vessels.

Many of those newbuildings have now arrived in the operating fleet and have done so at a time when the CPP market is picking up, many older vessels are going for demolition ahead of the IMO 2020 deadline, and trade volumes are recovering nicely. That is not to say that pure chemical tanker operators are doing well – recent earnings announcements show that, while things are improving, operators are not completely out of the woods yet. But there is optimism that an upturn is just around the corner.

Rather pleasingly, there has as yet been no sign that owners are going back to the yards to expand their fleets in anticipation of better earnings to come. Apart from fleet renewals, owners appear not to have the appetite nor the funds to indulge in risky contracting right now. The investment funds that saw potential in the coated MR tanker sector, which is more commodified than pure chemical tankers, are also avoiding further moves. WATCH THE FUEL GAUGE The medium-term outlook for chemical tankers seems bright but there are clouds on the horizon, which are perhaps also discouraging speculative investment. The most obvious is the impending IMO 2020 sulphur cap; the latest research suggests that the vast majority of chemical tanker operators are planning to burn lowsulphur fuels rather than invest in scrubbers, and while forecasts indicate that the price differential between standard and low-sulphur fuels will be manageable, owners do not have a firm idea of their likely operating costs next year.

The International Maritime Organisation (IMO) has also put in place ongoing provisions to reduce carbon dioxide emissions, which will require a change to operational practices by 2030 and, by 2050, a total move away from hydrocarbon-based fuels. Those deadline may seem far off, but ships have a 20- or 25-year life expectancy, so any newbuildings contracted today will have to take account of future operating requirements. HCB

A note on the tables: the fleets listed here include pure owners, managers and pool operators. As a result, individual vessels may be counted more than once. The figures are restricted to IMO-rated tankers, which includes many coated IMO III vessels that operate primarily (or even exclusively) in the CPP trades.