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The tanker spot market is broken: Braemar

The tanker spot market is broken: Braemar

The tanker spot market is currently broken and rebuilding relationships between charterers and shipowners is key to a sustainable market recovery, according to Braemar Seascope's research director, Mark Williams.

Speaking at the Seatrade Tanker Industry Conference in Copenhagen earlier this week, Williams stated that a market recovery could be brought about quickly with large scale scrapping of vessels over 12 years, but that it was not about to happen.

"It happened in the early 1980s, but it won't happen now because you can't get a concerted effort across the industry; because ownership is much more disparate and the global financial crisis has left the banks in a position where they don't want to force owners to demolish ships which haven't had any repayments made on them yet.

Williams used the example of a tanker that was launched straight into lay-up in 1979, and subsequently sold for scrap in 1982. "It only made one journey, and that was from the shipyard to the scrapyard. That's what needs to be happening again."

In a future scenario where vessels are scrapped at 18 years of age, and ordering only replaces demolished tonnage, a fundamentals-based recovery would take around four years.

"In my opinion the spot market is broken," Williams continued. "Since the early 1980s... shipowners have been paid to bear the risk of moving the [oil and products] cargo.

"Over the past four years or so, owners have not been paid to bear that risk. The spot market is not working. If we want a sustainable long term recovery in the tanker markets then we have to rebuild the relationship with the charterers, because at the moment the charterers do not want to see the owners and the owners are not feeling well inclined towards charterers."

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