VesselsValue Reports Sharp Drop in LR3 Tanker Speeds

by Jack Jordan, Managing Editor, Ship & Bunker
Monday July 6, 2020

LR3 tanker speeds have declined significantly over the past month as demand for clean tankers started to return to normal, according to shipping intelligence service VesselsValue.

Average laden LR3 speeds were 11.27 knots in June, according to data compiled by VesselsValue, down by 2.3% from May's levels and by 8.2% from June 2019.

On ballast the average LR3 speed was 11.44 knots, down by 5% on the month and by 3.2% on the year.

Ship operators changing speeds according to strength or weakness in freight markets and bunker prices can have a significant impact on bunker demand.

The slowing of LR3s "correlates with clean tanker rates steeply declining at the start of May this year, moving into June," VesselsValue's analysts told Ship & Bunker by email last week.

"This comes after rates skyrocketed in March due to hundreds of clean tankers loading low-cost refined products and being used for floating storage."

Giant Boxships Accelerating

Meanwhile, in the container segment, the largest ULCV ships have sped up slightly over the month.

The average speed for laden ULCVs was 15.79 knots last month, up by 1.5% on the month but down by 0.8% on the year. The average speed on ballast was 11.79 knots, up by 2.3% on the month and down by 7.3% on the year.

"This recent uptick is a very positive sign for the sector that has recently been rattled by port delays and record numbers of idle vessels due to COVID-19," VesselsValue said.

"The sector looks to be steadily recovering as June's average speed edges closer to January's figure, which at 16 knots was the highest seen in the past 12 months."

Slowdown for Handymaxes

In dry bulk the biggest change in speed reported over the month was for handymaxes.

Average speeds for laden handymaxes were 10.75 knots in June, down by 1.5% on the month and by 0.9% on the year, according to VesselsValue's data. On ballast the average speed was 11.48 knots, down by 0.5% on the month and by 0.9% on the year.

June's slowdown "is the first significant decline since November last year," VesselsValue said.

"Since then, Handymax speeds increased very steadily, suggesting this sector was not directly disrupted by the impacts of COVID-19.

"As countries begin to ease lockdowns, the demand for dry materials will rise, especially in the east where many of these vessels head for premium rates."