Features: - Tanker Operator

INDUSTRY - MARKETS
spot market for the same period. Owners are attracted to the spot
market by VLCC rates that could result in over $250,000 per day in
TCE earnings.
The consultant said that it had noticed spikes in a non-traditional time
08
admin@marine-service.gi snp@marine-service.gi
The 12 month MR
charter rate has been
above $20,000 per day
for the past two years
according to
McQuilling Services.
of the year, which is making the spot market an even more attractive
option. If owners are able to take advantage of these spikes, then the
spot market would be a much more lucrative proposition than the
period market. However, not all owners will have vessels in place at
the right time.
The decision on whether to opt for the period or spot market is
also dependent on financing structure, company policy, market
levels, among many other factors. In a simple observation of
historical market earnings, some conclusions may be drawn.
McQuilling said.
For example, in the Suezmax market, earnings have been clearly
higher in the spot market compared with the one year timecharter
market since January 2005. Furthermore, if triangulated, these
vessels earned even more.
In the smaller tanker sector, the immediate picture looked
somewhat different. In the MR sector, the market had favoured 12
months timecharters for the last two years. However, two
observations should be noted - the Singapore/Japan 30,000 tonne
lifting drags down the average spot earnings and triangulation was
not taken into account, despite being an essential part of MR
operation. Notwithstanding this, the 12 months charter rate has been
above $20,000 per day for the last two years and thereby provided
healthy earnings for most of that period.
Turning to longer period, McQuilling said that placing a vessel in
a three year or longer charter is becoming even more complex. There
were simply too many future unknowns that are almost impossible to
predict.
For example, the operating costs were expected to increase within
the general line of inflation including commodities, labour and
administrative costs. However, the cost of the shrinking number of
seafarers was forecast to increase at a much higher rate, thus driving
the operating costs upward.
Even if owners are increasingly trying to regulate escalation costs
into their calculations for period charter earnings, future operating
costs remain an enigma and therefore diminish the attraction of long
term charters, McQuilling warned.
TO
TANKEROperator � August/September 2008