Higher rates for large tankers lately may have provided a much-needed lining for shipowners’ pockets, but they have once again served to delay the scrapping of older vessels.

October 19th, 1995 23:00 GMT

by By Geoff Garfield

Published in WEEKLY

Last week, the World Bermuda was the first VLCC to be sold for demolition during the past two months, and although the recent fall in tanker rates could trigger more scrap sales, there is unlikely to be a rush unless owners face hefty drydocking and special survey costs, predicts broker Riaz Khan.

This means that 45 per cent of the world tanker fleet over 200,000 dwt remains at least 20 years old, a figure that rises to 56.63 per cent for VLCCs and ULCCs of 15 years and over, according to Khan’s Marinav Shipping and Trading statistics.

Earnings gap

Khan points out that although owners have good reason to complain about the market easing off, owners of older tonnage made very good profits for three months until rates turned. However, while modern ships also profited, a large gap still remains between earnings and what is needed to finance newbuildings.

Marinav’s figures give a world fleet of around 428 VLCCs and ULCCs, with an average age of 13 years. Total deadweight is 123.35 million tons.

Some 116 vessels aggregating 33.1 million dwt are still owned by oil companies – 27.1 per cent of the total fleet in terms of numbers, and 26 per cent of tonnage. The average age is again 13 years, helped by younger Japanese and Korean tankers. The US, UK and French oil companies have virtually ceased building modern tonnage for their own accounts.

Vela is the top oil company owner of large crude carriers with 23 vessels, followed by Exxon (10), Mobil (10), Shell (8), and KOTC (8).

Independents

Meanwhile, Marinav says the independents now own 306 tankers over 200,000 dwt, aggregating 88.36 million dwt, and over 70 per cent of the fleet in numbers. Surprisingly, the average age of their fleet is the same as the oil majors,  ontradicting the impression that oil company tonnage is older.

World-Wide, Bergesen and Nippon Yusen Kaisha (NYK) are the leading owners. Meanwhile, around 20 ships totalling 5.45 million dwt are owned by finance companies or shipyards. For these vessels, the average age is only three years. The top risk-taker among these funds up to 1995 has been Daewoo of South Korea, “with more deals lurking in the background,” says Marinav.