Shortsea tankers are enjoying profitable times

These – it would seem – are good times to be in the shortsea tanker business. The belief that there is a good future for the shortsea tanker up to 10,000 dwt is firmly underlined by a strong orderbook. No fewer than 183 vessels, totalling 963,598 dwt, are under construction.

In the coming months 45 chemical carriers and 69 product tankers will join shortsea fleets – many of these are for Asia-based owners. Part of this demand derives from Asian governments’ desire to become more self-sufficient with their own fleets. This is being led by Indonesia and Malaysia. Both countries have announced plans to introduce more small tankers into their cabotage programmes, several of which will be newbuildings.

Significant developments are also occurring in China, where mergers of companies and ambitions to expand in coastal and intra-Asia trade know no bounds. China Merchants Group is expanding its transport and logistics arm to Singapore. For years China has eyed expansion and participation in bunkering and coastal operations out of Singapore, and now China Merchants Energy Trading (CMET) aims to trade 2 million tonnes of bunker fuel out of Singapore in 2017.

Singaporean owners of bunkering tonnage have suffered from an ageing fleet, and in recent years they have been forced to open up the trade to overseas interests. CMET is investigating conversion of chemical tankers into fuel delivery barges, and is well placed for logistics support through ownership of group company ports, 30 per cent of which are located overseas.

Chinese interest in Indonesian development moved a stage further with Winning Shipping’s entry into the wet business – a Chinese first. The company placed orders in China for two 7,000 dwt chemical tankers, which will be used for Indonesian coastal trade only. Some reports indicate that the vessels are in fact chemical barges, but the breakthrough in Indonesia is significant.

China continues to expand its cabotage industry, and is now trading further afield to Hong Kong, Indonesia and Singapore. From small beginnings a year ago, export controls from Chinese refineries have been relaxed, allowing deliveries of greater quantities of diesel fuel (much of the coastal fleet is ideally suited). This is having an impact on Singaporean refinery exports, and competition will be further increased with more refinery capacity coming on stream in China over the coming years. With bigger shipbuilders in trouble, better times have arrived for smaller shipyards, which are winning substantial business.

The impressive statistics for vessels under construction auger well. With the demand for low sulphur fuels, 18 new bunkering tankers have been committed. But one of the most impressive gains has been business for asphalt and bitumen carriers, where 23 stand on order. This total increases further when considering vessels over 10,000 dwt.

In Europe, Scandinavian owners have taken technology a stage further with successive orders for Danish and Swedish tonnage encapsulating LNG dual-fuel technology. Trading to the Baltic and Northern Europe, they will take full advantage of shore- and ship-to-ship transfers of LNG. The importance of ice class chemical tanker trade was underlined earlier in the year with the establishment of Crystal Nordic A/S, Denmark. This is a joint venture by Nordic Tankers and London-based Borealis Maritime, involving ice-classed stainless steel 1A and 1B fleets. The joint fleet offers vessels, of 4,000-11,400 dwt, aggregating around 100,000 dwt for trade in Baltic Sea and Northwest European waters.

Owner/operators of ice-class tonnage generally will be hoping for a cold winter to enhance their already positive earnings, especially those that call at Baltic ports.

Sources for all tables on this page: BRL Shipping Consultants. Data as at 29 September 2016

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