Oil Supertankers Not Looking So Super

Some fairly daunting stats on the crush of supertanker capacity coming to markets, and its effects:

Supertanker owners are facing the longest stretch of unprofitable rates in 17 years as the supply of new vessels increases nine times faster than demand for oil.

Shipping companies are making $3,155 a day for a single voyage, 90 percent below the $30,900 Frontline Ltd., the biggest operator, says it needs to break even. Morgan Stanley estimates the tanker fleet will expand almost 13 percent next year and the International Energy Agency says oil use will grow 1.4 percent.

Ships ordered before rates plunged from $177,036 in July 2008 are swelling the fleet of about 526 supertankers. Owners have responded by cutting average speeds 9 percent since March and anchoring 24 percent more vessels since January, ship- tracking data compiled by Bloomberg show. John Fredriksen, the chairman of Frontline, said last month there “won’t be much money to earn” in shipping in the next two to three years.

…The global oil-tanker fleet will expand by 86.5 million deadweight tons in the next two years, equal to about 27 percent of existing capacity, Morgan Stanley estimates. The extra ships, being built by yards including Shanghai Waigaoqiao Shipbuilding Co. and Dalian Shipbuilding Industry Co., would exceed the previous record of 79.8 million deadweight tons set in 1974 and 1975, according to the research unit of Clarkson Plc, the world’s largest shipbroker.

More here.