Ordering a VLCC today requires ‘leap of faith’: Poten

Any tanker owner ordering a VLCC today needs to be confident his or her new ship can earn more than $30,000 a day for its lifetime, something not possible in recent times.

According to analysis from tanker broker Poten & Partners the price of a standard VLCC has increased to $115m, the highest level recorded since 2009.

“At $115 million for a standard VLCC, an owner needs on average about $33,500 per day for the next 20 years after delivery to break even on the investment. Given where earnings have been in recent years, this requires quite a leap of faith,” Poten stated in its most recent weekly report, something the New York brokerage said was all the more tricky as tanker shipping is no longer considered a “growth” industry.

The VLCC orderbook is down to 6.5% of the fleet, while 19% of the VLCC fleet is at least 18 years old, Poten data shows.

“If oil demand recovers and scrapping returns to normal levels, our industry is likely to face a capacity crunch in the next few years. This could lead to a significant boost in tanker earnings,” Poten concluded, pointing out that available yard slots for VLCCs are now only possible deep into 2025.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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