Frontline Sees Growing Pressure for Consolidation in Tanker Sector

by Ship & Bunker News Team
Friday November 24, 2017

Tanker operator Frontline sees consolidation ahead in the its sector as the market is expected to remain weak well into next year.

According to the company's chief executive Robert Hvide Macleod, demand for crude carriers is likely to remain weak until the second half of next year, Reuters reports.

"The tanker market is highly fragmented with many owners who have one or two vessels. It would be good to see the fleet sitting in fewer hands," the executive was quoted as saying in an earnings conference call.

Consolidation could be driven by the limited financing options available to small shipowners (those with a couple of ships) and stringent environmental regulations, Macleod said.

Frontline posted a $24.1 million third-quarter loss due to lower average spot daily time charter equivalent earnings, the company said. The third quarter loss has grown over its second quarter loss which stood at $19.4 million.

The prospect of increasing consolidation will not just impact the tanker sector. In bunkering, fewer shipping companies will add to the pressure on bunker players. 

"There is consolidation on both the supply and shipowning side," marine fuels consultant Adrian Tolson told Ship & Bunker.

"Over the next decade or so we will see bigger customers and bigger suppliers," Tolson added.