A trickle of new orders from significant owners could be a precursor to a much-needed fleet replacement drive
At the end of the first four months of 2022, only 11 new tanker contracts had been reported, compared to 110 in the same period of 2021; with hindsight, 2022 may have been the low point. In the first four months of 2023, 87 new contact orders were placed, with some of the biggest names in Greek shipping leading the return to the shipyards.
Capital Ship Management (CSM) has ordered four Suezmax tankers from New Times Shipbuilding in China, with an option for a further four vessels. The reported price per vessel is US$87M.Currently, CSM does not have any Suezmax tanker in its fleet.
Details of the specification of the new contracts is not clear, but the vessels are likely to be eco-plus. In April 2023, Capital took delivery of the 50,000 dwt newbuildings Atrotos and Anikitos, both chemical/product MR tankers of an eco-friendly design. These vessels are LNG Fuel Ready, assigned Wind-Assisted Ready and have shore-based electric energy connection (cold-ironing)-ready notations by ABS.
A similar specification could be assigned to the Suezmax newbuilding contracts placed at the same yard by fellow Greek shipping company, Maran Tankers. This mirrors the CSM contracts, for four firm Suezmax tanker orders with an option for four more.
“Speculation suggests many sales are for the Dark Fleet of sanction-busting tonnage”
Contracts for our firm and four options are a bold step and could signify a first step in a fleet expansion and renewal programme. Another indicator of this was that in March and April 2023, a firm order for 10 115,000 dwt coated LR2 tankers was placed at Dalian Shipbuilding from Dynacom at a reported US$62M each. Like CSM, these 2025/2026 deliveries will fill a gap in the fleet’s size range.
The above information is provided courtesy of Vesselsvalue, which itself has been in the news following a report that it has been purchased by North American shipping data company Veson. Veson also took over Q88, bringing together a significant portion of shipping information providers.
Vesselsvalue has developed a recognisable brand and Veson is unlikely to change the name, unlike Daewoo Shipbuilding & Marine Engineering (DSME) which is to be renamed Hanwha Ocean. While EU regulators blocked a 2019 bid by Hyundai Heavy Industries to take over DSME, because of concerns about the combined entity’s shipbuilding dominance in the LNG carrier sector, no such objections emerged in the Hanwha-DSME marriage. A large defence contractor, Hanwha figures to leverage DSME’s naval and submarine business to its advantage through the acquisition.
If additions to the fleet are beginning to pick up from a low base, the churn of sale and purchase activity of vessels already in the tanker fleet continues at a high pace. During March and April 2023, 152 tankers changed hands.
This included eight VLCCs, ranging in age from 15 to 20 years old, and in a now familiar pattern, the majority of the purchasers were not identifiable.
“The proposal could have a significant impact on European shipping companies”
Vesselsvalue analyst Rebecca Galanopoulos Jones noted that values for 20-year-old VLCCs are up around 4.5% from the start of 2023, and have increased by 56% year-on-year from a low of a demolition value of US$30M to a new level of US$47M. She added that fixed-age values for this age range have risen steadily since July 2022 and are now at levels not seen since August 2008. Without transparency as to the buyers, market speculation suggests many of these sales are for the Dark Fleet of sanction-busting tonnage.
The European Commission’s Proposal for a Directive on Corporate Sustainability Due Diligence has the potential to have a significant impact on European shipping companies that sell ships to unknown third parties. The proposal is part of the European Union’s broader efforts to promote sustainable development and make companies responsible for ensuring that their operations and supply chains are environmentally and socially responsible.
If passed into law, it would create a legal obligation for all European shipping companies to conduct due diligence on any ships that they sell to third parties. The proposal does not prohibit European shipping companies from selling ships to unknown third parties; rather, it requires them to take proactive measures to investigate the environmental and social impact of the buyer.
Under the current sales environment, such a regulation would have a dramatic impact on sales to the Dark Fleet and go a long way to improving the image of the tanker industry.
Improving the industry’s image is what Euronav is doing through the sale of a 2008-built VLCC. In March 2023, the UN signed a deal with Euronav for the US$55M purchase of a VLCC to replace the FSO vessel Safer. An announcement from the UN said its VLCC replacement storage vessel is now in drydock for maintenance and modifications before it sails to reach FSO Safer’s mooring point, about 9 km off the Yemeni coast. A UN-co-ordinated operation to remove more than a million barrels of oil from the decaying tanker off Yemen’s Red Sea coast will then ensue, in an attempt to avert what the UN describes as "a humanitarian and environmental catastrophe".
UN development Programme said the total budget for this first phase is US$129M, leaving a gap of US$34M. As of 4 April, the UN had received firm commitments for US$95M. Individual members of the public have also contributed more than US$260,000 through a UN crowdfunding campaign. For more information on the FSO Safer Project, visit: www.un.org/en/StopRedSeaSpill.
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