Tanker Owners Cash In on a Seller’s Market

By Ira Breskin NEW YORK —

This is a seller’s market for tankers.

That was the consensus of industry experts speaking here this week at the 31st annual Hellenic-American/Norwegian-American Chambers of Commerce Shipping conference. A confluence of factors should now drive tanker sales, they said.

Chief among them is the strong market and favorable charter rates for most classes of these ships, specifically crude oil tankers, said Michael Choina, head of the American transportation practice at ING Financial Services. Favorable market conditions will likely continue for the next few years, he said.

Industry consultancy Clarksons agrees. “Mainstream crude tanker market conditions are expected to see continued healthy conditions this year (though with potential variations between sectors, with upside perhaps focused toward Very Large Crude Carriers),” according to Clarksons’ January sector outlook, its most recent.

Weaker projected performance by product tankers and LNG carriers will temper the sale and purchase market for these vessels, panelists said.

Bolstering VLCC demand are capacity constraints tied to more than 10 percent of the fleet operating under sanctions for carrying Russian oil that is priced above a firm price cap, said Morten Arntzen, a senior advisor to Macquarie Bank.

Moreover, incremental VLCC new-build tonnage entering the market this year is relatively modest, slightly outpacing the projected increase in underlying cargo demand, keeping charter rates high, Clarksons notes.

Also driving strong VLCC sales is keen interest from motivated tanker operators that have the requisite investment capital to buy these large vessels, said Mark Filanowski, CEO of Pangaea, a bulk fleet operator based in Newport, RI.

“There are buyers for well-priced assets,” he said.

Tanker buyers can tap lots of cash they accrued during the recent bull tanker market, or offer high-value company stock uncharacteristically trading above Net Asset Value, to pay for purchases. And investment banks, sitting on lots of “dry powder,” are eager to lend.

Many sellers, in turn, are motivated because by selling their attractively priced assets now, they can realize significant capital gains, Filanowski said.

Ira Breskin is a senior lecturer at State University of New York Maritime College in the Bronx, NY and author of The Business of Shipping (9th edition, 2018), a primer that explains shipping economics, operations and regulations. 

Unlock Exclusive Insights Today!

Join the gCaptain Club for curated content, insider opinions, and vibrant community discussions.

Sign Up