Tanker Rates Doubling on Lower Speeds, Libya: Freight Markets – Bloomberg.com

Transportation Mar 09, 2011 No Comments

Supertanker owners are coping with the second-highest fuel costs on record by sailing ships at the slowest speeds in at least three years, reducing vessel supply and bolstering charter rates.

An empty supertanker burns about 90 metric tons of fuel, known as bunkers, a day when traveling at 14 knots, according to Riverlake Shipping SA, a broker in Geneva. Hamilton, Bermuda- based Frontline, the world’s biggest supertanker operator, can cut that to about 25 tons when sailing at 10 knots on the empty leg of a journey, said Jens Martin Jensen, chief executive officer of the company’s management unit in Singapore. That means saving about $42,000 a day at the global average price.

The combination of what the industry calls ultra-slow steaming and violence in Libya, Africa’s third-biggest oil producer, more than doubled daily returns for owners to $32,089 since the end of February, according to the London-based Baltic Exchange, which assesses more than 50 maritime routes. Traders of forward freight agreements, used to bet on or hedge shipping costs, anticipate the gains will last, with second-quarter contracts at $28,894.

via Tanker Rates Doubling on Lower Speeds, Libya: Freight Markets – Bloomberg.com.

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Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.