Tanker shipping rates, now high, will weaken in 2016, predicts the shipping consultancy Drewry, London.
“Buoyant crude oil trade and a rise in floating storage” have elevated rates recently, the firm notes in a press release. Rates for product tankers also have surged despite fleet growth as many product carriers moved into the crude market.
“High rates in the tanker market continued to attract a number of swing chemical-oil carriers into the products trade, while a number of bigger product tankers moved into the crude trade to benefit from higher earnings,” Drewry says.
While the use of tankers for storage has increased, newbuilding activity also has strengthened. Strong demand and high floating storage will support tanker freight rates awhile longer.
“But fleet expansion on increased deliveries and the return of vessels from floating storage will start affecting tonnage utilization rates from 2016, which will weaken freight rates,” Drewry says.
In the longer term, says Rajesh Verma, the firm’s lead analyst for tanker shipping, declines in capital spending on light, tight oil development and in rig counts point to a recovery in US imports of crude oil.
“This will provide a fillip to tonnage demand and push tonnage utilization rates higher, offsetting the growth in fleet,” he says.