Challenges faced by the oil tanker shipping sector right now
“The crude oil tanker fleet has not moved in line with demand, ” explains Lynn. "Demand for oil reduced, meaning that the sector was left with too many vessels."
"Lower levels of oil, due to OPEC capping production, has left the sector with a large fleet resulting in low demand and high supply numbers. Low earnings, high scrap price and subdued demand have all combined to contribute to an increase in scrapping of VLCCs."
“Earnings for very large crude carriers [VLCCs] in the first half of 2018 were as low at USD 6,001 per day on average, compared with rates of USD 40,000 in 2016,” says Lynn. "Although the 2016 rates were unsustainable, we've really gone from one extreme to another."
“Freight rates and fleet utilisation have fallen to record low level, meaning that profitability is strained.”
“Turbulent world politics have always dictated the oil sector and 2018 has been no different,” Lynn says.
“OPECs recent decision regarding production levels was expected to see an increase, and make a significant difference, but this is not the case - even with pressure from USA and India where the price is at a multi year high, Iran Sanctions and low outputs from Venezuela.”
If the oil tanker shipping sector were to be described in one word it would be 'uncertain'. Branded as a ‘year to forget’ by BIMCO, 2018 has provided a tough landscape for crude carriers to operate in and, unfortunately, doesn’t show much sign of relenting in the foreseeable future.
“There’s a lot of global anxiety about what’s going to happen within the industry and it’s a really challenging time for the owners and managers of tanker vessels,” explains Lynn Coutts, ATPI’s Head of Sales & Account Management in the United Arab Emirates. We talked to Lynn about the hurdles that those within the oil tanker shipping industry are trying to overcome and how an experienced, specialist travel management company (TMC) can help.