Britain To Build A ‘National Flagship’ To Promote Maritime Trade
by Alistair Smout (Reuters) – Britain is to build a new flagship to promote its business and trade interests around the world, the government said on Saturday, in a move it...
Frontline is offering tankers for charters “selectively” and the market is in a “state of panic” as excess ship supply drives down charter costs, Jens Martin Jensen, chief executive officer of the Hamilton, Bermuda-based company’s management unit, said by phone today. Frontline 2012 Ltd., a newer Fredriksen company, is adopting the same approach, he said.
Earnings for very large crude carriers, the industry’s biggest ships, plunged 75 percent from a year earlier to $11,624 a day, according to figures from Clarkson Plc, the world’s largest shipbroker. A surplus of the supertankers seeking charters in the Persian Gulf averaged 21 percent during the first quarter, the largest glut since 2009, according to market surveys by Bloomberg.
“Crude rates remain in the doldrums,” RS Platou Markets AS, an Oslo-based investment bank, said by e-mail today. VLCCs earned $17,000 a day on average in the first quarter, down 32 percent from a year earlier, it said.
Lowest Since 1999
Fredriksen split Frontline Ltd. in two in December 2011, forming Frontline 2012 to withstand a slump in returns that put the original company at risk of running out of cash. Frontline Ltd.’s shares fell to the lowest since May 1999 last month and slumped 95 percent since the end of 2007. The stock slid 1.5 percent to 12.75 kroner by the close in Oslo trading today.
VLCCs are losing $3,012 daily on the benchmark Saudi Arabia-to-Japan voyage, figures from the Baltic Exchange in London showed. That compared with a $29-a-day loss as of March 28, the last time before today rates were updated because of national holidays. Frontline said in February the ships in its fleet need a daily return of $24,200 to break even.
The exchange’s earnings assessments don’t account for speed reductions aimed at reducing fuel consumption, the industry’s largest expense. Last year’s average price was more than double the 2008 level, figures compiled by Bloomberg from 25 global ports show. Today costs increased 1 percent, the most since Feb. 7, to $633.15 a metric ton.
Charter costs for VLCCs on the benchmark journey fell 4.3 percent, the most since Jan. 24, to 32.56 industry-standard Worldscale points, according to the exchange. That means the ships are earning 32.56 percent of a dollars-a-ton flat rate, set once a year by the Worldscale Association.
The number of VLCCs seeking Persian Gulf cargoes exceeds likely shipments over the next 30 days by 22 percent, according to a Bloomberg survey of five shipbrokers and owners today. That was the same as last week.
Jensen declined to say how long Frontline has been adopting the strategy of rejecting some cargoes or in which regions it’s doing so.
– Rob Sheridan, Copyright 2013 Bloomberg.
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