The increase in tonne-mile demand as tankers avoid the Red Sea is significant, but not as large as from the Russia-Ukraine War, while investors rediscover the VLCC
Tankers avoid the Red Sea
There is now clear evidence of the impact on the tanker trade from the Houthi attacks on shipping in the Red Sea. One of the recent attacks, on the bulk carrier True Confidence, resulted in the death of three crew members, increasing the pressure on shipowners to divert vessels from the area.
Tanker routeing via the Cape of Good Hope is adding a significant distance of around 7,500 km, or +70%, on the MEG-UKC route. Clarkson Research Services (CRS) estimates the resulting uplift to tonne-miles at 1.5% for crude and 4% for products.
This, according to CRS, is less significant than the demand uplift resulting from the Russia-Ukraine conflict, which added a 9% increase in crude tonne-mile trade, and 14% increase to the products tanker sector in 2022-23.
Asyad Shipping issues first ESG report
Asyad Shipping, part of Asyad Group, and Lloyd’s Register (LR) have partnered to deliver the Omani national shipping company’s first ESG report, in line with the established global reporting frameworks.
Asyad Shipping, which operates a fleet of 85 vessels including gas carriers, very large crude carriers, product tankers and container ships, is one of the first maritime organisations in the Middle East to publish an ESG report.
The report focuses on the impact Asyad Shipping has made in its approach to become a green shipping company, to make ESG the cornerstone of its wider business strategy.
Crude tanker newbuild contracting jumps 490%
BIMCO shipping analyst Filipe Gouveia has issued a warning on the surge of VLCC contracting since the start of 2024. “In the first two months of 2024, crude tanker newbuild contracting surged to 7.4 m dwt, a 490% leap year-on-year, due to a rise in orders for very large crude carriers (VLCCs). A notable 19 VLCCs were ordered, already surpassing the number of orders for this ship type during all of 2023.”
BIMCO reported that in March 2023, the crude tanker orderbook accounted for only 3% of the crude tanker fleet, the lowest point since at least 1996. However, during 2023, orders for Suezmax tankers rapidly increased and orders for VLCCs have followed.
By February 2024, the crude tanker orderbook to fleet ratio had risen to 6%. Despite the high rate of contracting, the orderbook to fleet ratio for VLCCs remained at just 4%.
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