What a Difference a Year Can Make
Jan. 22, 2015
In 2014, the dirty and larger clean tanker segments straddled the line of recovery, while the smaller clean tankers remained under pressure despite positive expectations from the majority of market participants. Global spot market activity continued to rise from 2013 and the dirty tankers posted an increase of 6%, while the clean ships saw roughly 892 more fixtures year-on-year.
VLCC Although this segment was still faced with oversupply, fleet consolidation reduced the number of entities controlling those ships. This helped inject some volatility into the rates throughout the year. There was also a shift in general market sentiment after the year started off strong and rates began trading in ranges higher than they had been the previous year. A further bonus for owners occurred in the second half of 2014 when the fall in oil prices reduced bunker costs and increased owners’ daily earnings.
Owners did face their share of hurdles though to maintain elevated rates as the increased use of national tonnage to cover requirements chipped away at spot market demand and the continued use of “disadvantaged” tonnage (older than 15-years, ex-dry dock, etc) put a cap on rates. The AG/Japan benchmark route (TD3) traded at an average of WS 48 in 2014, compared to WS 42 (basis 2014 WS flat rate) the year before, while WAFR/China averaged WS 50, up 7 WS points from 2013.
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