Page 4: of Maritime Reporter Magazine (September 1996)

Suezmax Tanker Market: Undergeing Profound Change

The Suezmax market is undergo- ing a profound realignment: major independent shipowners, such as

Bergesen d.y., C.Y. Tung and Sanko

S.S. have exited the Suezmax mar- ket over the course of the last decade. Many others, including four of the six oil majors (Exxon,

Mobil, Shell and Texaco), and inde- pendents Worldwide Shipping,

Troodos and Novorossiysk

Shipping have reduced their pres- ence substantially In contrast, only three companies have clearly expanded their market presence — /Izipad

Azimuthing Electric

Propulsion Drive

With Azipod propulsion following benefits are achieved: • Excellent manoeuvrability • Better hydrodynamic efficiency • Space savings • Low noise and vibrations

NB. 491. 494

Cruise liners

Owner: Carnival Corporation,

USA

Gross tonnage: 70,400 GT

Azipod power: 2 x 14 MW

Delivery: 1998

Conversions 10557,10559

M/T Uikku and M/T Lunni

Arctic tankers

Owner: Nemarc Shipping

Company, Finland

Deadweight: 16,000 tdw

Azipod power: 1 x 11,4 MW

Delivery: 1993, 1995

NB. 490

River icebreaker Rothelstein

Owner: Osterreichische

Donaukraftwerke AG,

Austria

Azipod power: 2 x 560 kW

Delivery: 1995

Conversion 6070

Waterway service vessel Seili

Owner: Finnish Board of

Navigation, Finland

Azipod power: 1 x 1.5 MW

Delivery: 1990

Kvaerner Masa-Azipod

Munkkisaarenkatu 1

P.O. Box 132

FIN-00151 HELSINKI,

Finland

Tel. +358 0 1941

Fax +358 0 1942 480

ABB 6

Chevron, Fred Olsen and OMI

Corp. (which has sought ties with chartering interests) — and yet, according to Drewry Shipping

Consultants' latest report, entitled

Suezmax Tankers: Myths, Facts and Surprises, the S&P market registered 120 sales from 1990-95 and a fleet of around 370 ships.

Drewry's analysis found that almost half of these sales were to

Greek principals, such as Agency

Trust and Thenamaris, mainly targeting tonnage in the 15 to 20- year-old age group. The S&P mar- ket has also seen a sharp rise in interest in early 1996, with

Dynacom a featured buyer. A clos- er examination of some acquisi- tions shows that many of these aging vessels have only just passed special survey, leaving them well placed to take advan- tage of any improvement in the market.

Although it can be argued that

Suezmax tonnage is becoming marginalized in terms of its trad- ing options, this segment cannot be isolated from the fortunes of the tanker market as a whole. In this respect, Drewry forecasts that freight rates for Suezmax tankers will build on the strength of the first six months of 1996, reaching a cyclical peak around the end of the decade with time charter equivalent earnings of $25,000.

Drewry's detailed forecast freight rates to 2005 show the returns from spot market trading before capital costs may average around 10 percent, but the return on equity from newbuildings and modern tonnage will barely be positive, estimated at one to two percent. This still needs to be placed in context — average freight rates for the period 1991- 95 implied returns of minus one percent to plus one percent. All this serves to suggest that once again asset players will win the day, gaining steady returns from trading and selling into market strength.

Clearly, the Suezmax tanker has neither the trading flexibility of an Aframax nor the economies of scale of the VLCC, and yet it is subject to compliance with OPA 90 for much of its trade. Triumphed in the 1980s as the largest vessel able to transit the Suez Canal fully laden, the 1990s have seen cargo movements of this type

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Kvaerner Masa-Azipod

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