“This is the right time for consolidation and/or acquisition of secondhand or distressed assets.”
That’s the view of Kenny Rogers who heads up IMC’s chemical tanker subsidiary, Aurora Tankers.
Although he believes pricing will continue to drop further newbuilds in the chemical tanker sector are not a good thing now as they will continue to erode freight rates and dampen the recovery time from the present over tonnage.
Aurora’s fleet today consists of 20 chemical tankers with one more to deliver in January next year.
“The chemical tanker sector is presently challenged due to seasonal impacts and the effects of overtonnage,” Rogers observes. There has been a significant rise in tonnage supply which Rogers says is always a “downward driver” of freight rates.
“Traditionally,” he notes, “the chemical tanker sector has been very disciplined when it came to building tonnage, however many new investors have entered the sector that fundamentally do not understand the market.”
Aside from the tricky financial conditions, Rogers reckons the human element is the most challenging factor for most chemical tanker owners now.
“Maintaining qualified and motivated shore staff as well sea going staff in the next five years will be critical. Chemical tanker experience for shore side personnel is very limited,” Rogers says.
He concludes by warning: “Shipping in effect has entered a second downturn before the post Lehman Brother downturn was over. Only experienced and motivated management will keep owners afloat in these turbulent times.”