Increased Freight Rates and Higher Earnings has Shipping Industry in Optimistic Mood

Published Jan 14, 2004 12:01 AM by The Maritime Executive

Based on most market indicators for 2004, the worldwide shipping industry is extremely optimistic. Even the volatile tanker market is expected to have a great year.

The overall increase to the VLCC and the ULCC tanker markets last year was nine vessels, to a new total of 425. And, the number of large tankers over 25 years of age fell from 40 to 16 due to the IMO phased-out regulations. Currently, the world?s average tanker age is 18 years.

Today, there are 193 single-hull tankers, and there is simply not enough tonnage being built to replace the tonnage before the 2010 deadline, which applies to most of the current single-hull fleet.

Owners of single-hull tankers are confident that the more modern of these ships will operate profitably. Today, a 10-year old VLCC tanker will charter out for about $35 million-a-year. Last year, that same ship would have cost about $28 million. In December of 2003, VLCCs from the Middle East to Japan were chartering for $100,000 per day.

As Europe calls for the rapid replacement of single-hull tankers, the Asian shipyard markets will surely benefit due to dry-docking surveys requirements. It is estimated that properly maintained and carefully operated tankers will create an important second-tier market full of profits.