Tanker fleet growth on the cards, as 1,055 vessels are on order through 2014.
Assessment of the tanker market"s fundamentals for the years to come is becoming increasingly difficult, as more and more factors are joining the equation. According to a latest report by Mcquilling Services, a US-based researcher and maritime consultants, 2010 will see over 300 newbuilds joining the trade, a figure which is expected to be offset by nearly 200 single-hull vessels, which will head for scrap. Should these expectations are confirmed, 2010 will see some balance between tonnage supply and demand, as long as the newest prediction about an increased oil demand across the world are verified.
But, according to Mcquilling the same can"t be said with the same degree of certainty about 2011. The company said that in January the total orderbook for tankers stood at 1,055 ships of 27,500 deadweight and greater for delivery through 2014 (confirmed orders being those with IMO numbers assigned). ?From this figure, we deducted 1-2% of the orders as cancellations we expect to see from contracts held by financially questionable owners in similarly challenged yards. We then excluded IMO1-2 chemical carriers to arrive at an orderbook of 899 vessels.
Against newbuilds, our exit profile assumes that over half of those vessels due to leave the trading fleet in 2010 will actually exit, with the remaining continuing to trade having passed life extension inspections as per IMO provisions. Given poor returns, narrowing trade opportunities, and a considerable cost for 4th-5th special surveys, we expect few owners will invest in the extension of single-hulls. However, after careful review of nation states that own single-hulls, together with their IMO-13G stances, it would appear not all are ready to let older tonnage retire so soon.
All tanker sectors except Panamax and MR1 product carriers show net fleet growth in this period?, Mcquilling said.
According to the report the Panamax sector was actually reduced by 11 vessels during 2009, with estimates showing further contraction in 2010, before an expected marginal growth of four vessels in 2011. The VLCC sector grew by 24 vessels in 2009, and is set to experience further growth in 2010 by 31 vessels. The Suezmax fleet saw a net increase of 42 vessels last year, but we see expansion slowing in 2010 to only 19--largely tempered by forecasted delays from particular yards that hold a significant portion of troubled orders. The aged MR1 fleet also declines in number this year, before seeing a four-vessel net increase in 2011.
?Our long-held perspective is that the majority of tanker sectors are oversupplied with tonnage relative to demand. Peak net fleet growth is expected to occur in 2011, particularly evident with regard to the VLCC and Suezmax sectors. This means that tonnage overhang is almost certain to continue to build in the face of near-term tepid tanker demand. So while net fleet growth this year may be somewhat subdued, the tides of supply in 2011 will see considerably greater height? concluded Mcquilling.
Still, unexpected factors like port delays, as was reported in an earlier story, could very well act as offsets, to temper downward pressures at rates. Port delays are expected to be the case throughout 2010 (as was the case in 2009 as well), with conditions like weather conditions, the EU"s severe lack of storage facilities, port dredging and the prevalence of French Union strikes, still evident. 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.