Panellists at this week’s tanker session of the Maritime CEO Forum in Hong Kong stressed the need to protect any imminent recovery in the sector.
Featuring a banker and three owners, the panel was of the opinion that tankers are now bottoming out finally, however any hope of a sustained recovery will need all market pariticipants to act responsibly as fundamentals remain uneven.
Bob Burke, head of Ridgebury Tankers, said he was positive the sector was set for a turnaround.
“It seems as though as if demand and supply is getting there. Trade patterns have changed with more ton miles. Deliveries have not been as fast as expected and the scrap price is holding up,” Burke said.
Morten Arntzen, chairman of chemical tanker giant Team Tankers International, was bullish on prospects for his sector, made better by the consolidation seen his segment.
“We think the bottom has turned and it bodes well for next year,” Arntzen said.
Much to Arntzen’s joy, Domenik Nizet, senior vice president at DVB bank, picked out larger, stainless steel chemical tankers as his pick of the tanker segment.
David Palmer, recently installed as CEO at Hong Kong’s Wah Kwong, cited recent positive chartering data which would suggest a turnaround in tanker fortunes.
Conceding 2018 had been a “horrendous” year to date, Palmer added a bright note, saying: “We are starting to see, for the first time, in all the three tanker sectors, where charter rate are higher this month than the same month in the previous year. That’s important because it takes out the seasonal factors, and this is the first time in 32 months we have seen this happen.”
Palmer went on to urge his peers to ensure any fragile recovery was not steered off course.
“We’re in the very bottom of a tanker cycle and these things end when people do the right things,” Palmer told delegates made up of top shipping CEOs from around the world. “A note of caution as we come out of the tanker bottom, we are going to see a lot of volatility and we will need to conserve cash flow to counter that volatility as we come through a recovery. We need to act cautiously and protect that recovery,” he stressed.
On further consolidation within the tanker sphere there was a mixed feeling about the benefits.
Team Tankers’ Arntzen was adamant further mergers were beneficial, saying: “My view on the tanker space is that consolidation is absolutely necessary and has to happen. The world needs big, large scale public companies that can earn better and invest in the needed regulatory changes.”
Ridgebury’s Burke, however, questioned the rationale for more mergers. Conceding bigger tanker players have access to cheaper capital, Burke countered: “How long will consolidation take to get pricing power? I don’t see an answer to that. I find it challenging for a shipowner to control freight rates.”
The Maritime CEO Forum in Hong Kong was sponsored by Anglo-Eastern, Cobham, Compas, Dualog, DVB, Liberian Registry, Marlink and Transas. The next edition of the forum will be in Singapore in April 2019.
Morten Arntzen was once head of a large listed consolidated tanker company