Tankers up on Contango return: container rates down on slow trade

 Were daily tanker earnings to drop to $40,000, traders would be able to use the ships to store millions of barrels of crude at sea because the oil-price structure means they can sell cargoes for later in the year at a profit. Rates of $40,000 would be higher than the annual averages in 2009-2014.

January saw the worst start to a year for container ship earnings for three years. Vessels returned just $5,957 a day on average. The average between 2010 and 2014 was $7,712.Many of the world’s busiest container shipping routes are suffering from the slowdown in emerging markets and weak growth in Europe. China’s economy grew at 6.9 percent last year, the slowest since 1990. Europe’s predicted 1.5 percent expansion in 2015 would be among the weakest globally

[January 25  As OPEC saw its prices sink below $30 a barrel:. the cost to ship the commodity rose.   ].


[December 7 2011 Low rates yield slow steaming]

Shipping companies are cooperating to ease overcapacity and revive rates. Vessels reduce their speeds, known in the industry as slow steaming, to better manage overcapacity within the global fleet of about 600 VLCCs, Sejling chief commercial officer at Maersk Tankers. said. Lower speeds increase the amount of time needed to complete a voyage, effectively curbing the supply of ships.

SLOW steaming very large crude carriers to an average speed of 12 knots could increase fleet utilisation as tonnage is absorbed on voyages of longer durations, A new time charter clause for slow and super slow steaming will be published shortly by BIMCO. The clause was adopted by the Documentary Committee subject to the drafting team conducting a pre-publication review of some of the key features of the clause. The team met in London on 30 November and made a number of improvements to the layout and structure of the clause. The clause will now be circulated to all Documentary Committee members before being published by Special Circular along with explanatory notes.

The Clause deals with a number of potentially difficult technical and legal issues as it is designed to cover all types of ships and trades from the container to the bulk sector. The technical aspects have been resolved and clarified with the assistance of engine designers Wartsila and MAN Diesel. Two types of slow steaming are contemplated by the Clause: Slow steaming down to a level which would not require the owners to make any modifications to the engine – basically the cut-out point for the engines auxiliary blowers; and, should the owners and charterers agree that the vessel can slow steam to a greater degree, then an additional optional provision is given to deal with “ultra” slow steaming – which will apply only in a few cases.

In all cases the master retains the right to refuse to slow steam as the right of the charterers to order slow steaming is subject to the obligations of the master in respect of the safety of the vessel, crew and cargoThe trend to run many ships at speeds of 16 knots or even less is stoking problems for main engines

All six members of the Bloomberg Tanker Index (TANKER) from Frontline to General Maritime Corp. will lose money this year as fleet capacity exceeds the number of cargoes, We’ve had the longest period of sustained upturn in the history of the tanker markets until 2008,” Serck-Hanssen said.
Frontline, also based in Hamilton, will report a net loss of $228.3 million for this year, compared with 2010 net income of $161.4 million, the mean of 20 estimates showed. The company said Nov. 22 it would pay no third-quarter dividend and may run out of cash in 2012. The shares slumped 83 percent in Oslo this year, valuing Frontline at 1.99 billion kroner ($345 million). General Maritime, the New York-based operator of 29 tankers, filed for bankruptcy protection on Nov. 17.

BIMCO is the largest of the international shipping associations representing ship-owners controlling around 65 percent of the world’s tonnage and with members in more than 120 countries drawn from a broad range of stakeholders having a vested interest in the shipping industry, including managers, brokers and agents. read

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