- U.S. Port Fees and Economic Concerns Weigh on Global Tanker Market.
- Proposed U.S. Port Fees May Impact China-Linked Tankers Starting in October.
- VLCC Freight Rates Drop as Global Economic Concerns Rise.
Global tanker freight is likely to face downward pressure during the second quarter as a result of fears over a slowdown in the global economy. Moreover, the lower probability of U.S. port charges on China-linked vessels is adding to the uncertainty, as per market participants and analysts, reports S&P Global.
U.S. Port Charges on China-Linked Vessels: Timing and Exemptions
The U.S. Trade Representative’s (USTR) recent proposals may still establish separate classes for large, dirty tankers, like VLCCs and Suezmaxes, of China or non-China origin. Ships calling at U.S. ports from mid-October may be charged a dollar-per-net-ton fee.
Nonetheless, U.S. crude imports will remain exempt under the short-sea shipping exemption for vessels sailing within 2,000 nautical miles of American ports. The effect of the fee will be phased in until the fourth quarter of the year, and it may be subject to modification prior to its implementation.
Financial Impact on VLCCs and Suezmaxes
If the planned fees are applied, the majority of China-built, crude-carrying VLCCs would pay almost $1.9 million in fees when visiting U.S. ports from mid-October. The fee is anticipated to increase to more than $2.4 million by April 2026. Likewise, Suezmaxes would have an initial fee of $915,000, going up to approximately $1.17 million by 2026.
Impact on U.S. Crude Imports and Export Optimisation
Although the U.S. imports most of its crude from Canada, Mexico, and the Caribbean—areas that are exempted from the fee—lower volumes of Persian Gulf and West African crudes will be affected. Tanker brokers also pointed out fears that optimisation practices, including ship-to-ship swaps at the U.S. Gulf’s LOOP, would become difficult unless exempted in the final decision.
Tariffs and Countertariffs Weigh on Global Economic Growth
The US-China trade disputes, which are raging, have raised concerns over global economic growth and crude oil demand. Economic activity is likely to slow and weaken demand for oil and tankers, though some importers will try to restock inventories at lower prices.
Freight Rates Fall Due to Lower Demand
VLCC freight prices have plummeted. Platts benchmark Persian Gulf-China route decreased from w70 on March 20 to w59.5 on April 17. Analysts see more slowdowns in shipments, especially with China adding more tariffs to U.S. crude imports.
Fleet Deliveries and Ageing Tankers in the Market
About 40 dirty tankers, mostly Suezmaxes and Aframaxes, are due to be delivered this year, down from the 10-year average of 76 vessels. More than a third of the world’s VLCC fleet is also now over 15 years old, which represents an accelerated ageing trend in the fleet. Baig puts the estimate that one in five dirty tankers is more than 20 years old, mostly because of low demolition levels, since these vessels are still good enough to carry sanctioned cargoes.
Clean Tanker Deliveries to Remain Firm
Clean tanker deliveries, however, are set to remain firm, with Bancosta predicting 140 deliveries this year, including 80 MRs.
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Source: S&P Global
