Sea Views: Oil tanker rates in free fall

Following the announcement by Opec that it has no plans to make up the shortfall caused by the suspension of exports by Iraq, tanker rates fell back last week to their lowest level for about 17 years.

Earnings for a very large crude carrier (VLCC) operating from this region to the Far East fell to around $5,000 per day last week, compared with around $6,700 during the previous seven days and some $2,000 below operating costs. A typical VLCC needs to bring in at least $35,000 per day, just to break even, but the present trend is pushing many operators further towards or into 'the red'.

Spot rates in the Gulf are also set for further downward pressure due to the imminent glut of some dozen tankers that have been stood by awaiting cargoes from Iraq.

They are now very likely to be searching for alternative charters. Furthermore, an indication of the situation is being seen in the Far East where some VLCCs that have completed their voyages are now being offered for alternative voyages away from this region.

This notwithstanding, a glimmer of hope that would help to redress the situation would be a quick end to the oil workers' strike in Venezuela which, as the fourth largest exporter in the world, would see volumes double from their present levels. However, much depends on the political developments over the next week or so.

The present supply ratio of tankers compared to demand, is at its widest since the mid- 1980s. There are at present some 80 VLCCs available for hire in this region with just an estimated 40 cargoes to be shipped.

Pakistani port opens for night navigation:

Following long-standing demands by shipping companies and trade organizations that night navigation be commenced, Port Mohammed bin Qasim was opened last Tuesday for night navigation after the successful test of cruising by a vessel through the 45-kilometre-long channel the previous night.

According to the Business Recorder, completion of the night navigation project, which commenced about two years ago, is a major milestone in the history of Port Qasim, which is now poised to increase shipping traffic and consequently its revenue. Initially it is intended that only small ships will enter the port at night but, gradually, the facility will be extended to larger vessels.

Night navigation trials commenced the previous week with the first ever-commercial operation of night navigation being carried out last Monday night, under the supervision of Rear Admiral Assad Qureshi, Director-General of the port, when a small commercial ship successfully cruised the 45-kilometre-long channel.

The operation was performed with the help of one pilot boat and three tugs, captained by three PQA pilots who had been specially trained for this purpose in Europe. The sailing was reported to be smooth and hassle free, despite strong winds and rough seas.

Meanwhile, Karachi Port Trust (KPT) has announced plans for a second dedicated private container terminal costing $65 million that will eventually be able to handle 300,000 TEU per year. Commissioning of the first phase of the project, is scheduled for 2004 and will enable to port to handle 12 m-draught vessels.

Change of port plan for Bandar Abbas:

Plans for a privately operated container terminal at Bandar Abbas have been set back due to a change of heart by the Iranian government. Previously, Hutchinson Port Holdings and P&O Ports had been short-listed for a 30-year build-own-operate-lease arrangement, but the state Ports and Shipping Organisation (PSO) have now been appointed to carry out the development.

The move has cause disappointment within the Industry since the new plan is not expected to improve productivity at the port despite new equipment (including two post-panamax gantry cranes) that has been installed with further improvements expected soon.

The present port suffers from a poor reputation for turnround times and private opinion is that this could only be improved if the new terminal had been developed and operated by experts from the private sector. Prior to the change of plans by the Iranian government, formal tenders had not been issued.

Meanwhile, Belgian-based ECU-Line-Antwerp is shortly expected to offer transit possibilities to the Iranian port of Bandar Abbas by adding this destination to its list of regular direct services. The company, which is working on a total transit time of 25 days, says that when sufficient cargoes emerge, direct groupage containers will take only Iran cargo.

The port of Bandar Abbas is situated in the south of Iran, at the entrance of the Gulf and it is the country's premier port. The distance between Bandar Abbas and the capital, Tehran, is 1,563 kilometres with a road linking the two cities, through Yadz and Kashan.

Koreans plan register expansion:

South Korea is to designate the ports of Pusan and Kwangyang as 'international logistics centres', and the southern island of Cheju as a 'ship registration site,' under new proposals outlined by the government to create a 'shipping business belt.' These ports will be designed to attract multinational; companies that will require assembly plants and distribution centres to be close to international port facilities.

Furthermore, the Maritime Affairs and Fisheries Ministry said it would offer tax and financial incentives to foreign ships so as to make Korea's Registry more attractive with a government goal to increase the present gross tonnage of 19 million (with 2,055 ships) to 40 to 50 million. At present statistics, this would make South Korea the fifth largest shipping nation in the world.

Meanwhile, according to government figures, new ship orders for South Korea, which has the world market-share, dipped 46 per cent in the first quarter of this year. They reveal that new orders amounted to 917,000 CGT's for just 21 vessels (approximately $1.4 billion) which are down from 1.7 million CGT's for 55 ships (approx. $2.7 billion) in the same period last year.

Some South Korean analysts are saying that orders for new ships could be down between 14 and 22 percent in 2002, due mainly to the still recovering global economy and the unusually high level of shipbuilding activity during past years.

Frank Kennedy is a marine consultant based in Dubai.