Report Says Tanker Supply-Demand Gap Will Narrow By 1994

A recent report by a Japanese shipowner states that world tanker supply and demand will come nearer to balance in 1994 than at any other time in the previous decade.

The study, "Review and Outlook of the World Shipping Market," conducted by Mitsui OSK Lines, says the gap between supply and demand, which now stands at 40.7 million surplus, will dip even lower to 31.1 million. The present level is the lowest gap recorded in 12 years.

The tanker tonnage surplus reached its peak in 1983 at 123.7 million dwt.

In oversupply of tanker tonnage as a percentage of total supply, 1994 will mark a more than 15-year low, where surplus capacity will be equivalent to 10 percent of the total tanker supply. Ten years ago, the corresponding rate was almost 30 percent.

As far as freight rates are concerned, the report projects that the market will level off, with rates firming up in 1993 and further in 1994.

The level of freight rates for large tankers has already overtaken that for 1979, "and is likely to prove considerably firmer than those of other classes [of ship]." The report indicates that as the gap between supply and demand narrows, higher capital costs, including rising new construction costs, are certain to help push up freight rates.

Projections for tonnage demand assume that U.S.-bound oil trade volume will increase by over 5 percent per year until 1995, and that the Japanese-bound volume will also grow significantly more than the U.S. trade. Demand for oil in Asia will grow even more than Japan and the U.S.

Mitsui has based tanker supply figures until 1993 on the order backlog of newbuildings, and after that on estimated shipbuilding capacity.

The tanker scrapping element assumes ships remain in operation for the maximum permissable service life.

Other stories from November 1991 issue


Maritime Reporter

First published in 1881 Maritime Reporter is the world's largest audited circulation publication serving the global maritime industry.