The Tanker Market

By Ole-Rikard Hammer, P.F. Bassøe

2005: A wake up call or a Triple Crown for owners?

2005 is the Chinese Year of the Rooster. Other than the fact that anything to do with China continues to gain in importance for shipping, the relevant question for the tanker market is whether owners are finally due for a wake up call. This market has a poor track record of holding on to high levels, and the odds thus appear to favour a downturn. Unfortunately for those looking for an easy answer, there are plenty of good arguments in favour of another year of very strong rates. Could owners make it three in a row?

The most remarkable thing about the most remarkable tanker market in modern times was the relative absence of remarkable factors. There were no wars, strikes or unusual weather (with the notable exception of hurricane Ivan) to explain the incredible strength of rates; it was simply a classic situation of too many cargoes chasing too few vessels. While these forces certainly will become better aligned in 2005, particularly because fleet capacity is set for a considerable increase, continued strong demand growth will make a huge swing in currently very tight fundamentals difficult to achieve. Freight markets should thus be capable of delivering another year of high, but volatile, returns to owners. Rigid capacity growth introduces a new and higher level of risk, however.

This is only an excerpt of The Tanker Market

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.