HANSA 07-2022

SCHIFFFAHRT | SHIPPING
Guest Commentary: Erik Hånell, President & CEO, Stena Bulk
Recognising adaptability as an
important asset in the tanker market
Typically, we think of our crews, vessels, and partners as assets,
but the current market conditions for tanker operators remind
us of a less tangible asset – our flexibility. If the last few years –
marked by public health threats and geopolitical conflict – have
taught tanker operators anything, it is that having flexibility and the
ability to adapt to unexpected events is a corporate asset worthy of
recognition and cultivation.
»There is overcapacity in the global fleet. This is
further complicated by the return of tonnage that
had been earmarked for floating storage«
The tanker market is currently witnessing low global commercial
and strategic storage capacity, in part driven by oil producing
nations cashing in on expensive crude prices, which is having a
negative influence in the industry. Stocks of oil in some of the
world‘s top economies have fallen to their lowest levels in almost a
decade. If this trend reverses, the drive to refill them could nudge oil
toward $ 100 a barrel, requiring more transportation of crude products
and a premium on day rates.
There is overcapacity in the global fleet caused by limited recycling,
low order books, and high newbuild prices. This is further
complicated by the return of tonnage that had been earmarked for
floating storage. Weak rates should, in time, act as a natural balance
for this overcapacity and force older tonnage out of the market.
»75 % of the global tanker fleet will need to sail at
slower speeds or apply another form of carbon
dioxide emissions abatement«
At the regulatory level, the implementation of the IMO’s Energy Efficiency
Index for Existing Ships (EEXI) in early 2023 will pose
challenges. According to Simpson Spence & Young and Lloyd’s Register,
an estimated 75 % of the global tanker fleet will need to sail at
slower speeds or apply another form of carbon dioxide emissions
abatement to meet the regulation when it is implemented in just a
couple of months’ time.
These market forces make the current period one of the most difficult
and complex market scenarios to base business predictions or
commercial decisions around. Tanker operators must therefore ensure
excellence at the asset level and build modern fleets of efficient
tankers complemented by enough flexibility to adapt capacity and
meet market demands. There is also the need to continue to evolve
in tandem with changing market drivers, adjusting our approaches
and remaining responsive.
In other words, flexibility must be considered as an asset that will
differentiate tanker operators and provide them with a competitive
advantage, because it will allow them to serve customers in the best
way possible despite the surrounding market circumstances. This
mindset is not only about being ready for changing market conditions,
but also about aligning with a customer-centric approach to
the market – providing economical solutions to customers and
helping them to adapt at the same time.
From a strategic perspective, ship operators must improve their
adaptability while continuing to focus on sustainability excellence,
because the market will fully align business strategies behind society’s
wider decarbonisation goals. Indeed, there have been signs of
this in the last year despite the depressed tanker market, due to a demand
from customers for sustainable shipping options.
As 2022 unfolds, businesses are moving from survival mode to
future-ready mode. A decreasing dependence on oil products or, at
the very least, changes to the global supply chain, will add to the
market changes that energy majors and tanker shipping must adapt
to. Timing our evolution optimally and making the right decisions
is not easy, but it is the best way to build a flexible and resilient tanker
segment capable of meeting the demands of a recovering global
economy.
© Stena
22 HANSA – International Maritime Journal 07 | 2022