Tanker market faces pressures, but prospects are brightening.
While tanker rates experience newly found pressures, a number of factors are coming into play, brightening prospects for tanker owners. One of those is the continued trend observed during 2009, with increased port delays. As a result, tanker tonnage keeps being held up, limiting supply. In fact some analysts think that port delays are the main reasons, why the market didn"t collapse in the previous weeks. According to a recent report by maritime consultants McQuilling Services, port congestion and delays in 2009 continued to detract from available tanker supply, following similar trends seen in 2008. Various social and environmental factors around the globe, as well as limited infrastructure improvements seen in ports, have alleviated at least some portion of the bulging supply of tankers on today"s high seas. Predictions for 2009 called for continued civil unrest in areas such as West Africa, as well as forecasts for a turbulent hurricane season in the US Gulf. While these proved to be somewhat erroneous, tanker owners still found vessels spending more time in port than they had in the past.
?Delays in port have the effect of extending voyage durations, conceptually equivalent to slowing ships down. For instance, in 2009 VLCC"s spent about 3 days more in port per voyage (two port calls) than they had in 2007, effectively reducing 24 ships from the trade? said the US-based consultant. This trend has effectively been continued through to 2010, which has resulted in limiting supply in a crucial time, when too many ships were hunting too few cargoes.
This balance though could soon be shifted, as both OPEC and most recently IEA revised their predictions for oil demand upwards. At the same time, the ever so important factor for the tanker market of the recovery of the world economy, seems to be back on track, despite Friday"s dismal news on the stagnant growth of the eurozone economy. In its latest fourth quarter results report, Nordic American Tanker Shipping said that presently there are some bright spots on the horizon for the world economy. ?The decrease in exports of oil from OPEC to the West seems to have bottomed out. We consider this to be good news for the tanker markets. The recession is reducing the demand for transportation capacity internationally. The demand side for tankers to some extent continues to be impacted positively by the use of tankers for storage.
On the supply side, we now see clearly that the current financial situation for many shipping companies has led to delayed deliveries of newbuildings and to cancellation of newbuilding orders? NAT concluded.
Similarly according to Mcquilling, port delays are expected to spill over to 2010 as well, as a result of factors like weather conditions, the EU"s severe lack of storage facilities, port dredging and the prevalence of French Union strikes. But apart from these, other reasons as well will cause more port delays, like for instance the increases in global oil demand forecasted by OPEC, US EIA, and the IEA predict demand to average 86.3M bpd this year ?more than a 1M bpd increase from 2009.
Meanwhile, nearly 140 tankers employed in floating storage, many of which may potentially join in the traffic awaiting port operations. Also, China"s crude oil stockpiling program goes into stage- two as additional tanks come on-line. Yet enhancements to port infrastructure to meet steadily increasing imports seems lacking at present. At the same time, the ability of West African nations to stabilize their national, governmental, and port infrastructure to facilitate the free flow of goods. The ?indefinite? ceasefire issued by MEND last summer has been revoked, and attacks against oil majors in the Niger delta have already begun again.
Concluding, McQuilling noted that ?there is little that can be done to combat port delays by the participants of the tanker markets alone. Weather-related delays will continue to stall trade beyond control and predictability as is any act of nature. Furthermore, improvements to port infrastructure appear at the moment the Achilles heel of market growth, particularly evident in those nations hard hit by recession. Until accommodations for expanding trade are realized, port delays will continue to be the poisoned arrow in the heel of tanker turnaround time?.