Global tanker capacity supply exceeding demand

A surge in crude tanker vessel capacity over the next two years will lead to a fall in ship-owner earnings from current highs, according to the latest edition of the Tanker Forecaster, published by global shipping consultancy Drewry.

Rising capacity is being driven by anticipated tonnage demand growth in the dirty tanker market while tonnage demand in the product tanker market has been increasing with the expansion of refinery capacity in Asia and the Middle East.

“Drewry expects annual growth in the crude tanker fleet to accelerate from 0.7% in 2014 to around 5% over the next two years, to reach 377 million dwt by the end of 2017,” said Rajesh Verma, Drewry’s lead analyst for tanker shipping. “However, this growth is expected to recede thereafter, assuming vessel ordering remains controlled.”

A similar, albeit short-term situation exists in the liquid natural gas (LNG) tanker market.

LNG carrier freight rates have come under severe pressure due to rising fleet supply and stabilising LNG demand, as Japan prepares to restart its nuclear power plants. But this challenge to freight rates should soon be overcome.

This, said Drewry’s LNG Forecaster report, is due to 49 million tonnes per annum (mtpa) of Australian LNG cargo supply expected to hit the market over the next two years.