Increased tanker slippage provides some respite to market; 228 tankers to be delivered in 2012 says shipping analyst
Saturday, 21 April 2012 | 00:00
Tanker deliveries (slippage = rate at which new vessels enter the fleet, compared with estimates) have been less than anticipated so far this year, which according to a new report released from shipping consultant McQuilling Services LLC, could provide added support to tanker rates. In its report, McQuilling noted that in an effort to curb the tide from previous years' orderbooks, ship owners and companies have used a variety of measures in an effort to delay deliveries. Tactics include outright cancelations, foregoing options, taking delivery of a different vessel class or inspection delays. Due to the highly confidential nature of these discussions, developments between owners and ship yards are difficult to gauge.
“However, a measurable outcome from these discussions has been a discrepancy between expected and actual deliveries, or slippage. Historically, this figure hovered around 5%, yet since 2009 it has been much higher. Highlighting how these developments have helped reduce current tanker supply, our delivery estimates already consider delays on the basis of owners, ship yards or both facing financial difficulties. Our process of forecasting slippage considers many factors. Prior to making the adjustments to represent delays and cancellations we recorded 348 vessels 27,500 dwt and above that were scheduled to be delivered this year. This accounts for vessels that have a hull and an IMO number but omits deals listed as "reported". We then determine what vessels will be delivered as IMO 1 or 2, as they are not included in our inventory count, before making adjustments for delays and cancelations. The final step in estimating fleet expansion compares the current orders in a given year to a fraction of the average placed between 2001 and 2011. We use the greater of the two to determine the number of deliveries that could materialize on an annual basis during the forecast period. In 2012, we expect 228 tankers to be delivered into the market” said the New York-based company.
It added that “after wrapping up the first quarter of 2012, we expect that 25% (57 vessels) of these deliveries should have occurred. However, year-to-date deliveries have only been 18% (40 vessels). The lion's share of these deliveries has been VLCC, Suezmax and Aframax sized vessels. Notwithstanding the weaker delivery profile, tanker market fundamentals are still pressured by over capacity. This is especially true in the larger tanker classes where a variety of factors that tightened vessel supply have been eroded along with rates. The slower rate of delivery in the smaller vessel has provided some respite as it has been less pronounced. A higher than anticipated year-to-date exit profile has also helped reduce the impact of previous years' orders. This has been most prominent in the Suezmax sector where net growth has been zero in 2012. The scrapped Suezmax vessels have ranged from 13 to 28 years old highlighting the pressure owners of older tonnage are under in the current market which are compounded by rising terminal requirements” said McQuilling Services.
Analyzing these findings it mentioned that “the increased level of slippage during the past three years has provided a slight relief to the already oversupplied market. At the end of Q1, slippage was already above total 2011 figures but this could quickly change as delayed orders will inevitably enter the market. There were 43 confirmed orders for new tankers in the first quarter of 2012, the majority of which are not scheduled to be delivered until after 2013. Of these vessels, 33 are between 28,000 dwt and 52,000 dwt and cast a gloomy shadow on the horizon of MR tanker supply. Despite the warm temperatures that have transpired in Northeastern US, tanker owners will be unable to hit the beach for the summer. Tankers will continue being delivered from ship yards while market realities are often making the decision to send a tanker to the breakers easier. Some respite to tanker supply has come from Western sanctions against Iran, boosting ton-mile requirements, but the market is still on the edge. As a number of tanker owners are finding it difficult to cover operating costs, it seems only logical to send older tonnage to the breakers. However, if an oversupply issue for demolition yards occurs then scrap prices could be negatively influenced, presenting owners with a new challenge. Regardless of what transpires in the short-term, owners will be satisfied with net fleet growth of 40 compared to our January forecast of 57 through Q1 2012. In light of this data, slippage continues to provide some support to the tanker market's balancing act” concluded McQuilling Services.
Nikos Roussanoglou, Hellenic Shipping News Worldwide