Tanker Over-ordering "Will Prove The Sector's Ruin"

The global tanker fleet could reach 371 million dwt in 2016

Drewry Maritime Research (Drewry) Monday released its latest quarterly edition of Tanker Forecaster, saying that over-ordering of new ships could spell disaster for a recovering tanker market by 2016.

"Notwithstanding the recent spike in demand, the primary driver of freight rate and earnings recovery in tanker shipping has been the decline in fleet growth," said Rajesh Verma, Drewry's tanker shipping Lead Analyst.

"And if current ordering persists it will prove the sector's ruin."

According to the report, growth in the size of the global tanker fleet has been modest in recent years.

The fleet grew by only 0.6 percent in 2014, as deliveries of new vessels fell 38 percent and demolitions of older tonnage remained high.

But a spate of new ordering, combined with fewer expected demolitions from a renewed fleet, is expected to see world tanker tonnage grow 4 percent in 2016.

Orders for 22 million deadweight tonnes (dwt) of tankers were placed last year, and Drewry estimates that the global fleet could reach 371 million dwt in 2016.

But spot rates in the tanker sector have recently climbed steeply, particularly as demand for floating storage has been stimulated by a collapse in oil prices, and the outlook for 2015 remains positive.

"The short term outlook remains very positive with modest fleet supply growth and strong cargo demand anticipated for 2015, which are expected to push tonnage utilisation higher still, " said Verma.

"With bunker prices projected to remain low we expect tanker operators to make the most of a buoyant market, for the moment at least."

Late last year, BIMCO expressed concern at the growth in orders for very large crude carriers (VLCCs).