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Tanker owners resort to idling VLCCs as returns fall below operating costs - Report

Logistic News - Published on Wed, 15 May 2019

Image Source: World Maritime News
Platts reported that the lingering oversupply of vessels in the VLCC market has left shipowners weighing options to either idle, reduce sailing speed extensively or take on only short voyages as freight returns are seen below operating costs. The Time Charterer Equivalent or TCE, which is the earnings accrued, for a modern VLCC has slumped to around USD 7,000 per day on key Persian Gulf to North Asia routes, which hardly covers the daily running cost of the vessel, according to market participants.

To tide over the staggeringly low earnings period, two shipowners told S&P Global Platts that they have resorted to drifting their vessels to save fuel cost. When a vessel is made to drift in a safe location, the power to the main engine is switched off to save on fuel expenses.

A VLCC owner said that “It makes no sense for owners to accept further lower freight levels at the current TCE levels. Some shipowners are contemplating to avoid working on any cargoes until the freight returns improve to levels that would cover the operating expenses.

A shipbroker said that “With earnings so low, [a few shipowners are] doing short voyages, so that the pain is over a lesser amount of time. Not everyone can afford to stop ships.”

Source :

Posted By : Rabi Wangkhem on Wed, 15 May 2019
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