French orders to foreign shipyards

15%
At the same time, youth in the fleet is becoming more
prevalent. Nonetheless, VLCC and Suezmax categories
remain largely dominated by ships older than 15 years.
The Aframax category has the benefit - if this can be said
- of a better balance in the distribution of age.
All categories considered, construction costs since 1993
have undergone a cumulative drop of 30%. However,
in 1998 this phenomenon surged forward, registering
a fall of 15% since January of that year.
Although profitability of units built before that date has
been rendered particularly uncertain with the current
freight situation in the market, the temptation is great
for some shipowners to take advantage of the very
favourable conditions currently available in shipyards.
Unfortunately, it is clear that temptation too often overcomes
reason. Thus, to date, VLCC orders placed for
30,000
25,000
20,000
15,000
10,000
5,000
23%
20 years and over
15 to 19 years
US$/day
Aframax age distribution
18%
(in number of vessels)
10 to 14 years
5 to 9 years
22%
less than 5 years
22%
delivery in two to three years’ time account for 18% of
the fleet, Suezmax orders for 14%. Aframax figures,
which have undergone an already sharp variation over
these past two years, only account for 6 to 7%.
Meanwhile, in the hope that a slowing in the rate of
orders will set in rapidly, only scrapping the oldest vessels
can allow a better balance between supply and demand
to emerge, with a possible improvement in freight levels
as a key element.
Analysis of this phenomenon is restricted to VLCCs. This
is the category with the greatest proportion of vessels
older than twenty years (40% of the fleet, or 176 units).
As of this year there has been a decided increase in VLCCs
sent to the scrapyards (36 vessels since January), with
a slight increase in price, although we are still a long way
from 1997 levels.
Prospects
Suezmax tanker freight rates
Average earnings
Despite these discouraging data, we can try to conclude
by evoking certain elements that are likely to bring rates
up over the next two or three years.
There is a growing awareness among nations of the risks
run by continuing to operate aged and/or poorly maintained
tankers. The United States were the precursor in this trend
by setting an age limit on all vessels entering its ports.
Other countries have followed suit. Two examples of this,
which particularly affect us because of their Mediterranean
area of operations, are Libya and Syria, who have set
20 years as the age limit for vessels entering their ports.
Since around 50% of Aframax tankers that regularly
cruise the Mediterranean already have or will soon attain
this limit, it is reasonable to expect some disturbance
in rates.
130,000 T WAF/US
0
Jan 98 Mar 98 May 98 Jul 98 Sep 98 Nov 98 Jan 99 Mar 99 May 99 Jul 99 Sep 99 Nov 99
T h e t a n k e r m a r k e t
S H I P P I N G A N D S H I P B U I L D I N G M A R K E T S 2 0 0 0
51