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Tanker Shipping & Trade

Tanker Shipping & Trade

A consolidating shortsea tanker market draws Asian interest

Tue 10 Oct 2017 by Barry Luthwaite

A consolidating shortsea tanker market draws Asian interest
Caption: Plain sailing… coastal trades in Europe are steady. But government roadbuilding schemes in Asia are stimulating demand for new vessels

Chinese companies have 37 shortsea chemical tankers on order

In keeping with the bullish deepsea climate, shortsea tanker owners are enjoying good times. In 2017 there has been a shift of balance with an emphasis on asphalt/bitumen tankers and bunkering units. Year-on-year statistics show that most owners made their moves for new tonnage in 2016. A year ago the order backlog stood at 183 tankers up to 10,000 dwt, aggregating 963,598 dwt. So far 2017 has been one of consolidation, with the order backlog now having dropped to 163 vessels totalling 934,951 dwt.

Coastal tankers enjoy longer lives but the smaller categories are up against medium sizes, which are having a greater impact on traditional traders. The link chain (owner, charterer and recipient) becomes ever more competitive. A closer look at the orderbook reveals the faith shown in asphalt/bitumen carriers and bunkering tankers. A close examination of the economies of Asian countries shows that governments have emphasised road building among key infrastructure projects. These measures go hand-in-hand with a demand for specialist tankers on the basis of ownership or charter. Indonesia and Malaysia are key movers in these sectors. So far nine asphalt/bitumen carriers have been delivered in 2017. A further 17 are on order, emphatically underlining the bullish demand for road-making materials. There is similar demand in Europe, where Sweden plays an important part in supply of tonnage.

There is a realisation that bunkering fleets are ageing and need replacement. This is especially the case for supply of low sulphur fuels, given that the environmental rules are due to tighten even more from 2020. Evidence of this urgency is the fact that 23 bunkering tankers are on order. For the most part, these will cater to low sulphur fuel supply. Some of the orders are from new owners dipping their toes in the water to test the market: they often target a new bunkering area or charter business. With the latter it is apparent that less developed countries still employ very old tankers largely unsuitable for the job. Minds were concentrated by the recent sinking of a 45-year-old laden Greek tanker, which resulted in a serious oil spill. Greece is among a number of countries in serious need of an overhaul of its coastal bunkering fleet. The scale of movement of products on a coastal or shortsea basis to smaller ports is underlined by a healthy backlog of newbuildings totalling 64 units. Some of these will offer the useful option of coastal or bunkering employment.

Scandinavia is a leader in chemical and products movement, and controls a sizeable shortsea fleet serving North Sea and Baltic ports. This will be added to with the commissioning of 12 units in the next year. All will be built to the highest technical standards, including LNG fuel readiness. The latter is possible due to advanced infrastructure (LNG receiving stations) in Scandinavian and European ports.

Surprise investors are China and South Korea, with commitments of 19 and 16 shortsea traders respectively. There is a realisation that rather than chartering in tonnage, more self-sufficiency is needed in cabotage routes serving vast hinterlands. China is certainly closing the door on outsiders. This is especially the case in the chemical trades, where overall a healthy complement of 37 vessels is committed on the orderbook (several of these will pass into Chinese hands). Singapore will correct its competitive position by taking delivery of 17 new tankers, most of which will operate in home waters bunkering deepsea ships with low sulphur fuels. Many will argue that small is beautiful and offers flexibility of choice for the customer, consolidating and improving vital links in shortsea transportation of marine fuels.

SHORTSEA TANKERS ON ORDER
UP TO 10,000 DWT
   
     
Vessel type no dwt
Product carrier 64 394,741
Chemical carrier 37 239,896
Bunkering 23 116,395
Tanker 20 62,000
Asphalt carrier 14 88,320
Bitumen carrier 3 25,000
Fruit carrier vessel 1 4,600
Sulphur carrier 1 3,999
Total 163 934,951

 

   
Country of shipbuilder no dwt
China 57 365,650
Russian Federation 28 194,357
Korea (South) 16 78,800
Turkey 14 91,849
Brazil 13 26,000
Japan 10 40,449
Indonesia 8 44,500
Netherlands 4 31,996
Vietnam 3 19,500
Azerbaijan 2 16,000
Bangladesh 2 6,350
Bulgaria 2 5,500
USA 2 2,500
Singapore 1 6,500
Spain 1 5,000
Total 163 934,951
     
     
Country of shipowner no dwt
Russian Federation 20 138,221
Korea (South) 19 92,500
Singapore 17 93,795
China 16 103,550
Brazil 13 26,000
Turkey 11 77,640
Indonesia 9 48,000
Sweden 9 68,494
Hong Kong 8 59,000
Japan 6 25,799
Undisclosed 6 33,750
Azerbaijan 4 30,060
United Kingdom 4 27,940
Norway 3 20,525
Turkmenistan 3 21,200
Bangladesh 2 6,350
France 2 15,900
Italy 2 5,500
Malaysia 2 13,000
Netherlands 2 12,100
USA 2 2,500
Germany 1 7,000
Spain 1 5,000
United Arab Emirates 1 1,127
Total 163 934,951

Source for all figures in these tables: BRL Shipping Consultants. Data as at 30 September 2017

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