Oversupply of vessels and subdued demand have caused tanker rates to crash this month, forcing some very large crude carrier (VLCC) owners to ship crude at throwaway rates, according to Exim News Service.
According to analysts, VLCC rates have nosedived from the year's high of $17,368 a day in April to an average of $1,300 in September and, in fact, had touched a bottom of about $100 in the second week of October. These vessels incur at least between $8,000 and $9,000 a day as operational cost, including crew salary and fuel. The amount is higher if one takes into account the interest and vessel cost.
Making the situation worse was the rise in bunker costs over the last few weeks. A silver lining, however, was the slight increase in rates in the dry bulk sector due to improved Chinese imports in the last two weeks.
The analysts pointed out that tonnage equivalent to about 15-20 per cent of the existing fleet of Capesize vessels and eight to 10 per cent of the tanker fleet were scheduled for delivery in the next few months. Companies that put their fleet on long-term contracts could get better rates than the spot players, they said, but even then profitability would continue to be hit due to lack of backhaul cargoes.
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