China's plan for 80 supertankers worries owners

PUBLISHED : Monday, 07 November, 2011, 12:00am
UPDATED : Monday, 07 November, 2011, 12:00am


Plans by mainland shipowners to order up to 80 supertankers would be disastrous for foreign ship owners who would likely see charter rates plunge and vessels left idle, a senior shipping industry figure warned.

Torben Skaanild, secretary general of the Baltic and International Maritime Council (Bimco), said if all 80 ships were ordered 'it would kill the tanker market for years - it would be a catastrophe'.

Skaanild was speaking on the sidelines of the World Shipping (China) summit at Boao on Hainan Island on Friday about renewed speculation that China Ocean Shipping (Cosco) and China Shipping Development as well as other mainland owners intended to embark on an ordering frenzy for new tankers. This was to ensure mainland ship owners met Beijing's target that 50 per cent of China's oil imports should be carried on its own ships by 2015.

Figures from China's customs bureau show the mainland imported 130 million tonnes of crude oil in the first half of this year, equivalent to 434 supertanker shipments, and up 7 per cent year on year.

Moves to acquire a further 80 very large crude carriers (VLCCs) would more than double the existing combined fleet of China's four largest shipowners, who together control 56 supertankers each of about 300,000 deadweight tonnes.

Based on existing orders, China Shipping Development plans to add a further three VLCCs to its fleet by 2013 and Nanjing Tanker Corporation, part of Sinotrans and the China Shipping Company, will take delivery of a further 10 large tankers by the end of next year. They are among 30 supertankers on order to Chinese shipowners.

Captain Wei Jiafu, Cosco chairman, confirmed that mainland ship owners would acquire a further 80 VLCCs over the next four years.

Explaining Cosco's strategy, he said it was likely to form shipping joint ventures with mainland oil companies such as China National Petroleum (PetroChina), China Petrochemical (Sinopec) and China National Offshore Oil Corporation (CNOOC). These joint ventures were likely to order new tonnage.

Skaanild said some independent owners were worried about the impact on the crude oil tanker market if China went through with its tanker-owning target. Bimco, which had 900 owners as members who controlled 66 per cent of global merchant ship tonnage, believed in free competition, he said, 'but we have to express our concern'.

With shipowners facing the worst crisis for years as too many vessels chase fewer cargoes, Skaanild said some owners would not survive, so there would be plenty of ships to buy. Bimco's position was that owners should not be building new ships.

Peter Sand, Bimco's shipping analyst, said the VLCC market was in dire straits. 'Last year, a modern VLCC earned US$37,929 per day, while year-to-date 2011 earnings are down 55 per cent at US$17,157 per day,' he said - an amount that barely covered operating costs.