Rates to east firmer than to west

DemolitionWhen ships have ploughed the lonely sealanes for 25 or 30 years, it is generally time to retire.

So it is for a tanker the Endeavor II. She has been sold to Pakistan shipbreakers for $7.2 million (Dh26.4 million). She does have some history, however.

Back in 1972, when Japanese shipbuilding was in the doldrums, Sanko, a well-known Japanese shipping company with strong political connections, was encouraged to go on a buying spree.

They placed orders for more than 80 Aframax tankers with Japanese shipyards — at that time the largest order ever placed in peacetime.

The market was unexcitedly plodding along and sceptics suggested that the market would not be able to absorb such a large number of ships.

Then the market climbed in 1973 to record highs and the doubters were silenced. Just as quickly and just before the first ships were being delivered, the market fell to record lows.

It was into the climate of large numbers of tankers steaming into layup berths, that the Cumberlandia (as the Endeavor II was originally named), was handed over to Sanko.

Markets went up and down over her lifetime, but she certainly ended her days at the top. Last week there were seven tankers of this batch still trading. Now there are only six.

VLCC

Markets were mixed in this sector last week. There was less activity from the Gulf to western destinations and rates eased five points to Northern Europe and one point to the United States.

Eastern voyages were more plentiful and rates firmed to Worldscale 160 for Japan and South Korea and WS170 for shorter voyages. Atlantic basin activity was steady.

There is a slight imbalance in the tonnage supply and rates may continue to creep up.

Suezmax

Western hemisphere activity was reasonably busy. There was enough business quoted for owners to dig their heels in and prevent any easing of rates.

The announcement of cargo nominations from the Black Sea has been delayed again, but now this should be a sufficient spur to underpin rate levels.

Ships that ballasted through the Suez Canal found richer pickings from the Gulf, as numerous long-haul cargoes were quoted.

This provided sufficient impetus for owners to push rates above WS200 for Chinese discharges.

Single hull vessels had to concede slightly lower levels, but they were still able to command rates of WS185. It looks certain to be a busy week to come and rates should firm slightly.

Aframax

The only quiet place for Aframax tonnage was the North Sea and Baltic.

An untested notional rate of WS150 might be quoted for inter-UK Cont voyages and ice-class vessels still command WS330 for those cold weather voyages, but one has to look elsewhere for activity.

The Mediterranean came good with a bang. The market doubled for inter-Med voyages from WS110 to WS 220 in just a few days.

There is a feeling that these levels are unsustainable, however, and that a readjustment in freight rates will occur in the short term, but only by 20 or 30 points.

In the Gulf and the Far East, rates also rose sharply by more than 100 points to end the week at WS290 for Gulf/East. Indonesian cargoes to Japan and Korea also firmed, but not quite so dramatically.

In the Caribbean, fog and bad weather caused many shipping delays and rates rose sharply as a result. In the Aframax sector, we expect little change this week.

The writer is a shipbroker and marine consultant with more than 40 years’ experience in the tanker and dry cargo markets.