SLOW STEAMING "THE WAY TO GO"
Slow steaming is one of the best strategies to help tanker owners survive current market conditions, players tell Tankerworld.
?When freight rates are high, tanker owners would run their ships as fast as possible, because earnings are boosted when the total revenue from the voyage is divided among fewer days,? said one operator. ?But now, slow steaming is the the way to go. If it's not enough that freight rates are already at historic lows, firm bunker prices are further undermining earnings,? he added. ?Slow steaming means we spend less on bunkers.?
Brokers also tell Tankerworld that there is no need to rush voyages as the markets are currently suffering from an over-supply of tonnage.
?Owners have historically used slow steaming as a tool to tighten tonnage availability as vessels have a slower turnaround time, which is a good thing now when there are not enough cargoes to go around,? said a Singapore-based broker to Tankerworld.
Some brokers have been quoted saying that owners would be happy to extend their voyages as it would mean they would not have to enter the market as quickly once they discharge their cargoes.
Players also highlighted that slow steaming equates to less emissions as less bunker fuel is consumed.
?Ships need to burn exponentially more bunkers than normal if they 'speed'. Running the ship slower than its normal service speed definitely cuts [fuel] consumption and emissions,? a Singapore-based technical superintendent told Tankerworld.
The significance of slow steaming or a ship's speed in general with regards to owners' earnings has not been lost on industry watchers.
Tanker owners now have a resource to help calculate the best speed at which to run their vessels. In a note to Tankerworld on Wednesday, McQuilling Services said it has created a simplified optimum speed model that could incorporate client data to produce an optimum speed 'Dashboard' for use in evaluating vessel speeds in current market conditions.
According to the marine industry consultants, last year's record bunker prices focused attention on managing vessel speed to maximize the daily value of the vessel.
?Today, slumping freight rates are driving the same reaction as fuel costs consume a larger portion of a shrinking revenue stream,? said analysts at McQuilling.
Based on current market conditions of slumping freight rates and firm bunker prices, McQuilling said that the optimum speed calculation for modern tankers is again relevant and operating at the 'optimum' speed can produce substantial benefits to the ship owner or operator.
The analysts at McQuilling say they can customize their 'optimum speed model' with client data to produce a vessel or class dashboard for use in vessel deployment activities across multiple trades. (See story link).
At present, crude oil tanker markets across all sizes are getting slammed by OPEC supply cuts and weakening global oil demand, according to brokers.
They say that vessel over-supply is building up on the 'twin effects' of OPEC export reductions and declining demand due to the recession, with no real positive factor in sight to 'mop up' the excess tonnage.
?OPEC is supposedly trying its best to cut 4.2 million barrels per day (bpd) from the market. Full compliance is equivalent to at least two VLCCs out of a job everyday,? said one broker.
London brokers Gibson meanwhile, have pointed out that falling global oil demand and OPEC cuts are not the only culprits behind slumping rates.
Gibson said growth in the world's total tanker fleet more than doubled in the first three months of this year (Q1) compared to the same period last year.
Turkish Maritime Magazine