The first half of 2018 has been a historically bad year for crude oil tankers as earnings hit their lowest level on record in heavy loss-making territory, according to shipping industry association BIMCO.
Earnings for Very Large Crude Carriers (VLCCs) in the first half of 2018 were as low at USD 6,001 per day on average, with a Suezmax tanker earning USD 10,908 per day and an Aframax making USD 9,614 per day, BIMCO reported Tuesday.
After a very strong 2015 that saw the highest freight rates for crude oil tankers in seven years, 2016 was a step down, but still profit making, according to BIMCO. In 2017, however, loses returned to the sector for the first time in three years.
“2018 has been absolutely horrible for the crude oil tankers with freight rates and the fleet utilization rate falling to a record low level,” comments BIMCO’s chief shipping analyst Peter Sand.
“The total crude oil tanker fleet hasn’t grown at all in 2018. In fact, the VLCC and Aframax fleets specifically haven’t been growing over the past 12 months. The freight market is severally impacted by very weak demand growth.
“Overall, the freight market is oversupplied. The key to higher earnings lies within a very low fleet growth and a return to normalized demand level. The sooner the better – but patience is required,” said Sand.
According to BIMCO, it may take until the second half of 2019 for the sector to become profitable again, but increased demolition and an “oil price contango” could trigger a faster recovery, it said.