A Splash 247 news report states that Maritime CEO Forum Singapore: A vain attempt to find a tanker sceptic.
Ongoing coverage of the Maritime CEO Forum
Tanker sceptics were not just thin on the ground in the ballroom of the Fullerton Hotel last week, they were non-existent.
In our ongoing coverage of the Maritime CEO Forum from Singapore, today’s focus is on the high-level, bullish tanker panel.
“If everything stays the same 2023 will be a fantastic year for tankers,” stated Erik Lewenhaupt, president of Concordia Maritime, in opening remarks that set the tone. The Swede did concede that there were plenty of “grey swans” that could change the direction of the markets such as recession, war, interest rates, and sanctions.
What is the significant plank of the discussion?
The war in Ukraine formed a significant plank of the discussion. Even without the invasion, Eva Birgitte Bisgaard, chief commercial officer at Maersk Tankers, argued that the fundamentals of the market were already tight in terms of supply and demand.
“It is like I am talking in an echo chamber. I am still trying to find a sceptic or a pessimist in the tanker market,” mused fellow panellist Kevin Wong, director of Indonesia’s Buana Lintas Lautan (BULL).
It is like I am talking in an echo chamber. I am still trying to find a sceptic or a pessimist in the tanker market
Audience member Adam Kent, who heads up consultancy Maritime Strategies International (MSI), was unable to play devil’s advocate when called upon by the session’s moderator.
“As long as I have been looking at the tanker markets in the last 20 years we are probably at the most positive outlook from a fundamentals perspective that I can remember and that is with China crude imports being down 5% so far this year,” Kent said.
Today’s sale and purchase market
Looking at today’s sale and purchase market in order to glean market sentiment, another audience member, Fergus Gifford, a broker with Arrow, described a two-tier market where there was immense demand for older crude ships with “crazy prices” for these tankers going into grey trades. These high prices have also pushed up prices for younger tonnage too.
“Supply is very limited. Owners are not willing to release their ships. Prices will continue to go up. Values will continue to skyrocket,” Gifford said.
The panel were asked what would happen to the markets in the unlikely event the war in eastern Europe stopped tomorrow.
Reiterating how the fundamentals were great before the Russian invasion started, Maersk’s Bisgaard said the war had added volatility, but had yet to add tonne miles.
“If the war was to stop we’d still have some of these parameters that would come into play because basically we will see more tonne miles coming in,” Bisgaard said, predicting continued strong markets, but without the peaks.
In the last 20 years we are probably at the most positive outlook from a fundamentals perspective
“People don’t realise the impact of sanctions have not been fully felt yet,” warned BULL’s Wong. “Europe has not realised what an uncomfortable position it is,” he added, going on to predict the tonne mile situation would continue to grow even if war stopped tomorrow, a point of view shared by the man sitting to Wong’s left, Alan Hatton, the CEO of Foreguard Shipping.
Europe will not be sourcing energy from Russia in any great quantity for the foreseeable future, he told delegates with energy security now a top priority in the continent.
Quite so, concurred Concordia’s Lewenhaupt. “There’s so much negative sentiment for Russia in Europe right now. So even if war stopped tomorrow the effect would linger on until you had substantial regime change in Russia, which is not likely to happen,” he said.
Changing global trading patterns
Covid had already started to change global trading patterns, as cargoes got stuck, leading to the concept of near shoring rising up the political agenda, said Bisgaard from Maersk.
The hour-long session then turned its attention to one of the main topics du jour, namely the forthcoming EEXI and CII legislation, something BULL’s Wong compared to the introduction of the global sulphur cap in that while there were some in shipping willing to spend cash in preparation for January 1’s implementation, the majority will just go with the flow and depower their ships. The overall impact on the markets of the twin green rules would likely be minimal most panellists felt, as tankers have already been travelling slowly. How the rules are enforced stirred greater debate however.
“If u get a D or an E rating, you can get away with it for three years,” Bisgaard said of EEXI.
Enforcement is indeed a big issue, agreed fellow Scandinavian Lewenhaupt. “Will it be a paper tiger or will flag and port states be able to enforce it?” Lewenhaupt questioned, suggesting that ultimately it will be a commercial, not a regulatory, enforcement with charterers in the form of oil majors taking ships with rankings of C and above.
More tiered tanker market
This in turn could lead to an even more tiered tanker market, he said, with several shades of grey fleets including the sanctioned fleet, then one that is 20 years old, and one that is D and E rated. Sometimes these tiers will overlap, sometimes they will not, he predicted, suggesting that in good markets they will work niche trades, before finally being scrapped when markets turn south.
The new regulations could easily be played with too, with Foreguard’s Hatton telling delegates: “Anywhere there are rules you will find people who will want to bend them” while Maersk’s Bisgaard described CII as a “weird setup”, which had led many in shipping to take their own carbon emissions plans as CII would not do enough.
Maritime CEO Forum Singapore 2022 was sponsored by Aderco, Cobham Satcom, CyberOwl, Dualog, Inmarsat, Liberian Registry, Ocean Technologies Group, SEDNA, Synergy Group, Vanir Marine, Wallem, WIZ Bulk and Zero North.
The next Maritime CEO Forum takes place at the Monaco Yacht Club on October 12 while April 24 has been announced as the date for the event’s return to Singapore, timed to coincide with the start of the city’s busy official maritime week.
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Source: Splash 247