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Renewed interest in US Jones Act as tanker hires soar

Renewed interest in US Jones Act as tanker hires soar
Soaring rates for tankers trading on the US domestic trades under the Jones Act were a hot topic at one of the panels at last week’s Marine Money conference in New York.

The quote of the day came from BankAmerica Merrill Lynch banker Matt Thomson, who revealed that he handled sports transactions when shipping deals were sparse, likened the Jones Act to investments in expensive sporting franchises- where owners joined an exclusive club.

Thomson, along with fellow financier Andrea Zano, from CIT Group, explained the efforts that financiers take to properly value Jones Act companies- where the “franchise” value adds to that of the assets working in “illiquid” markets. Bob Flynn, from tanker brokers MJLF, which has maintained a US desk throughout its four decades in business, offered slides showing a sharp move upward from Jones Act product tankers- where rates above $70,000 per day have been booked, with one oil company rumoured to have paid over $100,000 per day on a time charter.

It is all about new patterns of oil trades, with Flynn’s research suggesting that US oil production from shale could reach 3.2m barrels per day in 2015- a doubling of levels seen in 2012. No wonder that it was all smiles from Alterna Capital’s Harry V. Toll, who described the construction of the product tanker American Phoenix, delivered in mid-2012 from BAE’s yard at Mobile, Alabama, and now working in the coastwise refined products trades.

For tanker trades, panelists Eric Smith from OSG, and Dick Fagerstal from Seacor, noted that shipyard berths for building the larger (45,000- 50,000 dwt) product tankers thriving amidst renewed coastal movements of refined products are booked solidly for the next several years.

With Wartsila’s John Hatley describing the growth of gas fuelled vessels, the panelists also considered possible construction of Jones Act tonnage for movements of LNG; OSG’s Eric Smith emphasized that distribution patterns around Caribbean markets would require “handy-sized” gas carriers for trading around the islands, smaller than the designs contemplated by yards such as NASSCO, which has recently booked an order for four diesel powered product tanker newbuilds.