An increase in tonne-mile demand as a result of more long-haul crude oil movements is one main reason pointed out by many for the hike in rates, but what do the actual numbers in average laden distances show?
Poten & Partners scrutinised the reported spot fixture activity in the main crude tanker segments, and qualified that its fixture data is “good”, but it only covers reported spot market fixtures, not worldwide vessel movements.
Interestingly in the VLCC segment, the average distances from 2009 to 2015 year-to-date do not support the notion of longer average distances. After a 618 mile (9%) increase from 2009 to 2012, average distances for VLCCs actually dropped in recent years.
The increase from 2009 to 2012 was attributed to the result of two rapidly developing long-haul trades: from West Africa to the Far East and from the Caribbean to Asia. “It is difficult to explain the downward trend in average VLCC distances after 2012,” Poten & Partners said.
“The fixture data seems to indicate that while the West Africa to Asia trade keeps growing, there has been a reversal in the VLCC traffic from the Caribbean to Asia (in particular to India).
“We think that this is not a correct reflection of what is actually happening. Since many movements are done under long term contracts, we believe that an increasing number of the cargoes from the Caribbean are moving outside off the reported spot market,” the analyst explained.
In the suezmax segment, the average distance of the reported spot voyages increased steadily from 2009 through 2013 due to more long-haul fixtures originating in the Arabian Gulf and the Caribbean. However, this trend reversed in recent years.
“This can be partially attributed to the well documented decline in West Africa-US movements as a result of the domestic tight oil boom,” Poten & Partners said.
For aframax tankers, the trades are fairly stable and the distances in this segment fluctuate less than in those for the larger ships. When comparing 2009 with 2014/15, the main change is the significant drop in intra-Mediterranean voyages as a result of the Arab Spring.
Poten & Partners pointed out that while this had a considerable impact on aframax movements in the Mediterranean, in particular the ones originating from Libya, it did not have a material impact on the average distances for this segment.
“In summary, the data from the average distance analysis is not conclusive and in some cases (suezmax) the trend appears to contradict the argument that an increase in average laden voyage length is a leading explanation for the high freight rates in the tanker market,” the analyst said.
It added that other factors, including floating storage, port congestion and limited fleet growth, are important factors as well.
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