Bonus urged for upgrade of oil vessels

THE International Association of Independent Tanker Owners (Intertanko) has urged all players in the market to give premiums to shipping lines which invest in upgrading their ships and operations.

Intertanko chairman Andreas Ugland said the process to improve standards in shipping involved the entire industry.

''However, as often is the case with change, it begins with ideas, then everybody starts to talk about it, then action comes,'' he said, adding that this process appeared to be at the end of the second phase.

Changes taking place included a self-auditing system being set up by classification societies, the introduction of an Enhanced Survey Programme by the International Maritime Organisation, and agreement on new pollution compensation rules, he said.

Others were the acceleration of scrapping of obsolete tonnage and the rejection by the oil industry of sub-standard tankers, although almost the entire fleet seemed to be able to find employment, he added.

''Some governments have stopped discriminating against environmentally friendly tankers by deciding to exclude the segregated ballast tank volumes when assessing port charges. We hope other governments and port authorities will follow this example,'' Mr Ugland said.

Charterers would have the opportunity this year to recognise responsible owners and pay a premium for good tonnage, rewarding quality owners and so enable them to fund further upgrading, he said.

''If charterers make a real effort to single out sub-standard tonnage in 1993, this tonnage will find it more difficult to trade, he said.

''This in itself would increase scrapping and stimulate repairs, maintenance and replacement programmes required to satisfy ever-growing expectations in the areas of safety and quality.'' Mr Ugland said that during early 1991, VLCC (very large crude carrier) freight rates peaked at more than US$50,000 a day, largely in response to Iranian and Saudi Arabian demand for storage tankers.

However, such levels were short-lived and rates collapsed to around $5,000 to $6,000 by early 1992, he said.

Even though rates recovered during the autumn to above $20,000 a day, the average rate for the year was still below $10,000 a day, or below operational costs for most of these vessels, he added.

VLCCs which spent time on repairs or waiting for cargo had earned even less, Mr Ugland said.

Break-even rates for newbuildings were more than $40,000 a day, depending on interest rates, operational costs and depreciation period, he noted.

Other tankers sizes and markets such as product trades, Aframax and Suezmax tankers had experienced the same depressing freight rates, he added.

''The outlook for 1993 is uncertain. The economies of the United States and some South American countries appear to be picking up, but the picture in Europe and Japan is rather flat,'' Mr Ugland said.

But some positive factors were acceleration in scrapping activity, with Taiwan now re-entering the market, the attitude towards quality and the environment, and low contracting, he said.

Delivered tonnage reported in 1992 was around 13.5 million deadweight tons (dwt) to end November, while scrapping sales totalled around 11 million dwt during the same period.

''Safety and quality, as with everything else in this world, have a price tag. Many tanker owners face difficult choices in 1993,'' Mr Ugland said.