In the first eight months of 2023, there were 140 new contracts for product tankers, totaling 10.72 million deadweight tonnes (DWT). The last time over 10 million DWT were contracted from January to August was in 2013.
Slow Past-Promising Future
Newbuild contracting activity during the past five years has been low at about 5.46 million DWT per year. In addition, the product tanker order book hit a low of 9.67 million DWT in December 2022, the smallest order book since June 2001.
Due to the low contracting of ships, the fleet has only grown at an average annual rate of 2.6% between 2018 and 2023. Deliveries from the current order book will remain low until 2025 when they are expected to exceed 8 million DWT for the first time since 2009.
Prime Targets
- The sanctions on Russian oil product exports by G7 countries appear to have created new trades where the older product tankers remain in demand.
- Still, 9% of product tankers, equal to 11.65 million DWT and 6% of the total fleet, are currently more than twenty years old and are prime targets for recycling, not least due to the tightening greenhouse gas emission targets.
Alternative Fuel
Only 16% of the ships and the DWT in the order book are currently expected to be prepared for the use of an alternative fuel.
According to estimates by the International Energy Agency, demand for transport fuels will peak in 2026. Balancing the need for fleet renewal to meet future decarbonization targets while considering the potential for waning demand due to decarbonization remains a key challenge when planning new orders.
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Source: Bimco
