Tanker owners fight back on low charter rates
Tanker owners have launched an initiative to improve charter rates, which they say have fallen to levels which are consistently below basic operating costs
Intertanko, the London-based association representing independent tanker owners, is calling for a dialogue between owners and oil companies to ensure the sustainability of the tanker business and the global energy supply chain.
"High-quality owners are going to the wall," says Katharina Stanzel, Intertanko's managing director, after four years of unfavourable trading conditions. As well as low rates - which reflect the world surplus of tanker capacity - Stanzel says owners are being hurt by late payments and by "the erosion of charter-party terms".
Although tanker owners are supposed to be paid on completion of the cargo's discharge, Intertanko's members reported payment delays typically of between five to 20 days last year, and sometimes of up to a month. "A delay of 10-15 days increases working capital requirements by 30-50%, or $3m for a typical Suezmax tanker," Stanzel says.
There are also delays in payments for demurrage - waiting beyond an agreed time in port. Intertanko says demurrage claims typically take three months to settle and can take more than a year. Some major oil companies are among the charterers delaying payments, according to data supplied by the association's members.
Intertanko says there is a lack of transparency in the tanker market which allows charterers to use their "enormous market power" to manipulate terms. "Charterers have electronic tracking and are knowledgeable, and can offer cargoes one at a time, or use their own vessels for some cargoes, manipulating the market with the aim of fixing each rate below the last one," according to an Intertanko specialist. "The balance of power is uneven."
Behind the problem is the strong growth in world tanker capacity since the turn of the century, coupled with the slack growth in oil demand since 2008. But Intertanko argues that construction of new vessels was necessary to bring in efficiencies in fuel use - fuel accounts for 60-70% of the operating cost of a large tanker. Following the construction programme, the world tanker fleet is relatively young, but vessels designed for a 25-year life are having to be scrapped when only 10-15 years old.
Intertanko produces data showing that tankers of very large crude carrier (VLCC) size trading on the spot market - 60% of all VLCCs - have accumulated losses averaging $10,000 per day since 2009. The association says tankers have been trading below break-even since 2009, and since 2011 have been trading below basic operating costs. The association represents 235 independent tanker-owners, between them operating a fleet of some 3,380 vessels.