The last 12 months has seen a healthy mix of newbuilding and secondhand investment on the part of Danish owners. Presently there are 298 vessels aggregating 11,300,364 dwt under Danish ownership and this will swell further as the 44 tankers on order, aggregating 1,946,597 dwt, join the national fleet. Danish operations are further boosted by a significant number of overseas-owned vessels that are chartered, managed or pooled in tanker fleets.
Although the serious troubles following the financial crash are now firmly in the past, new challenges await and the industry still faces a tough future. Flagship owner Maersk is engaged in a consolidation programme that will see the company concentrate more on energy and tankers as its core business. Withdrawal from VLCC operations has given way to an emphasis on Handy, LR2 and Aframax units, with an extensive newbuilding programme in evidence.
Torm Line, which was saved by the stewardship of private equity firm Oaktree Capital, is second only to Maersk as the leading owner of product carriers. Torm’s fleet of 72 units aggregates 4,075,771 dwt. In the troubled years there were forced sales to cut debt, but those vessels have been replaced with secondhand units (rather than more expensive newbuildings). In November 2015, a short time after Torm was completely rehabilitated, four newbuilding product carriers were committed at Guangzhou Shipyard, China. These were contracted as 115,000 dwt Aframax LR2 carriers, but provision for the choice of LR1, LR2 or MR2 units is built into the contract. Options are attached for six more: if these are exercised, it is likely that a mix of the three types will be preferred. The Aframax quartet is valued at US$200 million. Deliveries are scheduled for 2018 and will set the seal on a remarkable Danish comeback.
Maersk Tankers controls 77 vessels with a further 13 product carriers on order, aggregating 720,400 dwt. The AP Moller-Maersk group will divide its core interests into two separate businesses: transport and energy. Once again, in a bull market the Danish giant has acquired secondhand units in asset play to balance its fleet demands. This is mainly to cover medium range MR2 business, which is thriving. Accordingly, the company chose previous block maker Samsung Ningbo in China for construction of nine MR2 50,000 dwt product carriers for delivery in 2017 and 2018. Sungdong, South Korea, is working through a 10-vessel programme of MR2s, with the first three having been completed earlier this year. Eventually the newly commissioned ships will see 20 per cent of the existing fleet sold off, but pricing for both buying and selling will have to be attractive (Maersk will never accept a valuation below its own expectation). In addition to its own tonnage, the fleet is complemented by a further 50 vessels in its LR2 and Handy pools, plus 24 time-chartered units.
Celsius Shipping is a big mover in chemical business. Despite its Danish roots the company was domiciled in Monaco but, along with other major owners, recently relinquished its occupancy due to higher business taxes. Now headquartered in its natural home of Copenhagen, the company has been busy expanding this year. Celsius has under its wing 10 chemical tankers, five of which are directly owned (the rest are managed or leased with purchase options). Until recently Celsius was involved in the products trades, but after it entered into a share swap deal with Oaktree Capital all the vessels in its products fleet were absorbed into Torm Line.
The collapse of Chinese builder Nantong Mingde called an abrupt halt to Celsius’ ambitious newbuilding programme for 14 chemical tankers (each 24,600 dwt) but, undeterred, the owner switched the vessels to Jiangsu Hantong in November last year at a cost of US$37.5 million apiece. In electing for Handysize units, Celsius will tap into a growing sector. The company went into a partnership with Odfjell Tankers for six 17,000m3 ethylene tankers, but this order has run into trouble due to the deep financial problems of Sinopacific Offshore & Engineering. Celsius already operates two ethylene tankers under the partnership with Odfjell. The Sinopacific order was originally for four 17,000m3 and four 22,000m3 ethylene carriers. Celsius axed two vessels on grounds of late delivery, and Odfjell has hinted it will not take delivery of any of the original eight vessels. Celsius has switched attention to acquiring bulk carriers while pricing is at low levels.
The smaller chemical and product carrier fleets are taking full advantage of burning LNG fuel – Baltic ports and Rotterdam are the most advanced in replenishment fuel stations. Most tanker orders still specify dual-fuel machinery due to the chronic lack of LNG infrastructure globally. In September the product carrier Ternsund, delivered in June this year, effected a ship-to-ship LNG transfer from the Dutch-owned Coral Energy off the port of Gothenburg, marking the first time a cryogenic fuel has been bunkered by ship-to-ship method. This important step will convince more owners to adopt LNG – but Danish owners need no persuasion, having been pioneers and advocates of LNG for some time. Terntank ordered four 15,000 dwt LNG-fuelled tankers from Avic Dingheng, China, two of which were delivered in June and September. The remaining two are due in December and early 2017. Terntank co-operates with marine solutions provider Wärtsilä, fuel and bio-products supplier North European Oil Trade (NEOT), and energy and environment consultant Wega under the Zero Vision Pool project. NEOT is also involved in chartering Terntank vessels, along with Esso Norway.
All the Danish owners are reporting increased operating profits from a bullish trading market, but acknowledge spot rates will fall as newbuilding deliveries gather pace. Norden and Torm have resurrected their successful formula of bareboat chartering quality Japanese product tanker newbuildings. Six MR2s ordered by Nissen Kaiun have been chartered out on a long-term basis with obligatory purchase before or at the end of charters. Two each will trade for Norden and Torm, with the other two going to Singapore’s BW Group.
TANKERS ON ORDER – DANISH OWNED
TANKERS IN SERVICE – DANISH OWNED
Sources for all tables on this page: BRL Shipping Consultants Data as at 26 September 2016
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Source: Tanker Shipping & Trade