Tanker Rates to Decline Next Year On Fleet Expansion, Floating Storage Demand

by Ship & Bunker News Team
Tuesday December 8, 2015

In its latest Tanker Forecaster, Drewry predicts tanker shipping rates will decline in 2016, with the arrival of newbuilds along with decreased utilzation as floating storage the key drivers for declining rates.

"Firm tonnage demand and high floating storage will continue to support tanker freight rates in the near term. But fleet expansion on increased deliveries and the return of vessels from floating storage will start affecting tonnage utilisation rate from 2016, which will weaken freight rates," said Drewry.

And while it already expects an "upsurge" in deliveries of new tonnage, Drewry warned owners to be cautions when making further orders.

"Vessel owners need to moderate newbuilding activity as sustained high ordering activity risks adversely affecting tanker vessel earnings over the next five years" said Rajesh Verma, Drewry's lead analyst for tanker shipping.

However Drewry also said that it expects decreased oil and gas drilling activity in the U.S. will lead to an increase in crude oil imports into America, which in turn will increase tonnage demand and lead to higher utilisation rates.

In November, Ship & Bunker reported that the hedging market for oil tanker freight had risen sharply, to $4.5 billion in 2015.

Ship & Bunker News Team
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