Tanker Deliveries Up 37%: BIMCO
Delivered tonnage of crude oil tankers have grown by +37%, whereas total fleet demolitions for 2019 have slumped to the lowest in a decade with a reduction of 52% from the year before, says BIMCO, the largest of the international shipping associations representing shipowners.
Newbuilding orders have remained low through the year with contracted tonnage down by 48%, it said.
Amidst a market filled with uncertainty and geopolitical unrest, BIMCO maintains its bearings and turns to the market fundamentals to cut through the mist of market speculation and uncertainty-driven hype.
“Through the first nine months of 2019, delivery activity has picked up substantially from last year, particularly in the crude oil tanker segment where deliveries are up 37% year-on-year. In the same period, there has been a 52% reduction in demolitions. When combining the two, the issue of troubling overcapacity is once again looming on the horizon,” says BIMCO’s Chief shipping analyst, Peter Sand.
According to BIMCO, deliveries have soared in the crude oil tanker fleet. During the first nine months of the year, 23 million (m) deadweight tonnes (DWT) has been delivered, which is an increase of 37% in tonnage delivered year-on-year (y-o-y). Total tonnage of dry bulk deliveries has increased 28% y-o-y to a total of 29m DWT.
Many shipowners opt for delivery in January, in order to nominally decrease the birth age of the ships, which partly explained the many deliveries in January 2019, where 12 Very Large Crude Carriers (VLCC) with a total of 3.7m DWT were delivered.
“In total, 53 VLCCs, adding up to 16m DWT, have been delivered through the first nine months of 2019. Alongside a slump in demolition activity, the total crude oil tanker fleet has grown at a staggering rate of 5.4% from January to September,” says Peter Sand.
On the demolition side only 10m DWT has been scrapped in 2019, a 52% decrease when compared to the same period last year. Even in light of relatively high demolition activity in recent years, the demolition numbers for 2019 are particularly low. In fact, this has been the lowest annual amount of scrapped tonnage since 2007 (Source: Clarksons).
Demolition activity grinded to an almost complete halt in September with only 300,000 DWT sent to the scrapyards, BIMCO said.
In the fourth quarter of 2019, the commercial shipping markets have seen freight rates shooting through the roof, particularly within the crude oil tanker segment and to some extent, also within dry bulk shipping. Recent attacks on the Saudi Arabian Abqaiq oil installations and the tightening of US sanctions on Iran have caused average VLCC freight rates to reach to 307,888 USD per day on 11 October 2019. The freight rates have since declined, but remain very high.
Activity on the contracting side remained subdued throughout 2019 with all segments posting decreases compared to last year. Overall, contracting activity is down by 48% compared to the first nine months of last year, when measured in tonnage.
However, this should be viewed in the light of the heavy contracting activity in 2017-18, that will surely affect the markets in years to come.