Tanker Fleet Utilization
Jan. 16, 2018
The concept of real time demand using remotely sensed vessel position data is predicated on the ability to draw conclusion about a vessel’s condition at a certain point in time. The ability to capture daily demand is a step change in current methodologies of assessing ton-mile demand. Historically, tanker demand (measured by ton-miles) relied upon lagging data, often times incomplete and revised at a later point. Delving further into daily demand data, we explored the delineation of the data to account for disadvantaged tankers. At this stage, the definition is simplified to include vessels that are over the age of 15 on a given day. As we continue to “fine-tune” our process, we intend on expanding this definition to include vessels that are exiting dry-dock and are engaging in their maiden voyage.
In 2017, we measured an average of 137 million ton days for the VLCC fleet. A quick extrapolation of the data indicates that under a basic assumption that the average cargo quantity was 270,000 metric tons, demand could be measured as the equivalent of 507 VLCCs during the year. On a year-on-year basis, demand increased 3.8% (or 18-19 VLCCs), the lowest growth rate since at least 2014, the first year remotely-sensed data availability can be relied upon. In 2015 and 2016, we calculated ton-day demand to increase 10.1% or 11.2 million tons and 7.9% or 9.7 million tons, respectively. This indicates that the pressure on freight rates in 2016 and 2017 may also be attributed to the demand side.
The deceleration in demand growth coincides with elevated supply growth of about 12% over the 2016/2017 period. Our remotely-sensed vessel data analysis accounts for all tankers (by segment) reporting a satellite position. However, when a tanker does not report a position for more than 15 consecutive days, it is removed from the analysis. The aforementioned demand and supply statistics resulted in a 2017 VLCC fleet utilization of 61.9%, down from 64.24% in 2016, corresponding with a US $17,000/day decline in time charter equivalent earnings over that same period.
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