The Tanker Sustainability Scenarios

Transcription

1 Prof Martin Stopford President, Clarkson Research The Tanker Sustainability Scenarios Future view of tanker Industry Intertanko Sustainability Day Grand Hotel, Oslo, 30 th May 2013

2 1. A word about scenarios 2. What do they look like? 3. Tomorrow s scenarios:- 1.The Shipping System 2.Geopolitical change 3.Commercial model 4.Transport performance Survival means finishing the race

3 A view of the future presented as a range of alternative stories. Developed by Herman Kahn in the 1950s who borrowed the term from the film industry (a scenario outlines the film). The Base Case is "surprise free. Alternative scenarios encounter unexpected developments. The benefit of scenario analysis is that it can deal with variables which are not quantified. Herman Kahn (February 15, 1922 July 7, 1983) was a military strategist and systems theorist employed at RAND Corporation, USA.

4 The shipping industry has been carrying oil for 152 years We can see how tanker scenarios behave if we look at where we came from It helps in thinking about what might drive future scenarios The further backward you look, the further forward you see

5 Tight Supply There was a shortage Of shipbuilding capacity 2. Shipper driven market Tight logistics driven by Oil majors 3. Tanker Investment Bubble 4. Distressed Market Driven by structural overcapacity 5. Convalescent Market Working hidden surplus out of system 6. Boom Market 3.5% trade growth pa with 2% st. dev W/S Gulf Europe % trade growth pa with 2% standard deviation 4 11% trade growth pa with 1.5% standard deviation 5 6 0% trade growth pa with 7% standard deviation 7 3.5% trade growth pa with 3.4 % standard deviation

6 Oil price World Economy Energy Demand 224 m bpd Oil Demand 87 m bpd Local Oil Production 47.1 m bpd 2009 Trade CRUDE IMPORTS 39.3 m bpd W. Europe 10.2 m bpd N. America 6.7 m bpd Japan 3.6 m bpd S. Korea 2.4 m bpd India 2.8 m bpd China 4.5 m bpd Singapore 1.0 m bpd Other Asia 2.8 m bpd Others 2.9 m bpd PRODUCTS 16.0 m bpd Asia 5. m bpd CRUDE EXPORTS 37.9 m bpd Long Haul Middle East 14.5 m bpd 6-12,000 m Short Haul N. Sea 2.5 m bpd L. America 3.9 m bpd Africa 6.7 m bpd Indonesia.4 m bpd FSU 5.2 m bpd Others 3.6 m bpd Oil Traders Demand 160 W/S VLCC 3 Month Av. Layup Pools Flag of Registration Jan '73 Jan '75 Jan '77 Jan '79 Time charter Own Trade Cargo Owners Freight market Supply Jan '81 Jan '83 Jan '85 Jan '87 Jan '89 Jan '91 Jan '93 Jan '95 Jan '97 Jan '99 Jan '01 Owners FLEET 1 Oct m dwt Orderbook m dwt VLCCs 166 m dwt Suezmax 62.5 m dwt Aframax 92.1 m dwt Panamax 28 m dwt Products m dwt Scrapping 1 Oct m dwt Cash freight -costs Shipyards Bank Credit Policy Deliveries m dwt Refinery Consumer

7 Economy, prices, Oil Trade Shipyard & equipment capacity The changing geopolitical scene Flag & Port State developments Piracy, prevention and protection Fuel cost, crew, charterers policy Sustainable carbon & emissions Ship finance structures Information technology & efficiency Operational performance 1. The Shipping System 2. Geopolitics & regulatory systems 3. The commercial model 4. Transport performance

8 Today most independent tankers work on the spot market The main alternative is industrial shipping How could the balance develop in future? It was a wonderful dream, but it s over

9 The Spot Market For Oil Transport Showing dwt of independent tankers on time-charter and spot 220 Million dwt Tankers Trading Spot Tankers On Timecharter

10 Oil Trade Lagging Dry Oil Trade Dry Trade

11 Million Dwt Deliveries 46 m dwt in 1976 Deliveries The Tanker Building Cycle Shipyards expand to replace the ships built in the 1970s boom Scrapping Deliveries 48 m dwt in 2009 Last phase of 1970s scrapping! FORECAST

12 Tanker Size Analysis VLCC Suezmax Aframax Panamax

13 Japan Europe OECD s 1.3 billion population N. America 3.80 China S America Africa billion Non-OECD population want to consume at OECD levels Tonnes of sea imports per person a year 31/05/2013 Martin Stopford 13

14 The Changing World of Trade W Europe N America Japan SE Asia OECD 42% Sea Trade in 2011 M. East Africa 3% 5% S America 5% Oceania 1% W Europe 21% China S America Africa M. East Oceania Non OECD 58% China 22% Japan 9% N America 11% ,000 1,500 2,000 2,500 SE Asia 23% Million tons imports

15 OECD & Non OECD Share of Sea Trade 90% OECD % Trade Non OECD % Trade % World Sea Trade 80% 70% 60% 50% 40% 30%. Non OECD reaches 77% in % 10% 0% Forecast made with polynomial trend forecasting equation OECD decline to 20% in

16 Merchant Shipping Offshore Trend Continues Offshore Flag Tonnage Nudges 1 Billion GT 72% of the merchant fleet is now registered offshore Up from 42% 23 years ago We are evolving into a truly stateless industry 1, National & Foreign Flag Fleets M GT Foreign Flag National Flag W orld fle e t M dwt Owne rship N a tiona l Fore ign T ota l , , N a tiona l 58% 42% 31% 28% Fore ign 42% 58% 68% 72% T ota l 100% 100% 100% 100%

17 Top Shipowning Nations 2012 M GT Flag of Registration National Foreign Total Foreign % Japan % Greece % Germany % China % USA % S Korea % Chinese % Bermuda % Norway % Denmark % Canada % Taiwan % Singapore % UK % Russia %

18 Top FLAG STATES IN 2012 Top 10 Flag States Status % Increase Panama Open % Liberia Open % Marshall Is Open % Hong Kong Open % Singapore Open % Bahamas Open % Malta Open % China National % Greece National % Cyprus Open % %

19 Piracy Activity Number of vessels in month Jan-08 Escaped Vessels captured Vessels held (end month) The 3 ships currently held are worth US $53 million Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 22unsuccess ful attempts In Oct ships held at start Nov 2012 No ship captured by pirates in Nov 2012

20 IMO moving into areas involving technical design and operation of the ship The industry lacks a coherent technical base to resolve these issues The Regulatory Focus

21 The Future of Regulation The UN based system is fragile and struggling with complex technical challenges The Port state regime is impulsive, proactive and politically motivated Surge of piracy raises many issues about global maritime regulation

22 $ per day 40,000 35,000 30,000 SHIP FUEL 2005 Ship costs 3x fuel 25,000 20, Ship costs half fuel 15,000 10,000 5,000 Bunker cost 1 Year TC Rate Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price

23 Fuel Consumption Ships Fuel consumption of ships has not improved much in the last 13 years The containership consumption was about 140 tpd at 24.5 knots (latest 136 tpd) The bulker was about 35 tpd at 14.5 knots (latest 33 tpd) Index of fuel consumption in MPG (higher is better) Panamax bulker Panamax containership

24 Fuel Consumption Cars Fuel consumption of cars did not improve much until last year The Ford Focus 1.6 Zedtec averaged about 39 mpg. The 2011 models pushed that up to 47 mpg and the 2012 model to 56 mpg Index of Miles Per Gallon Ford Focus Panamax bulker Panamax containership

25 slower SLUMP today we are here, the lowest since under 8.5 Less Horsepower, Less Losses Index covers tankers, bulkers, LPG and containers Number of months slower need flexi-speed? NORMAL Months since 1990 that Clarksea Index fell in each earnings band shown below BOOM Clarksea Index earnings band $000/day faster More Horsepower, More Profits faster

26 The Future is Flexibility Build ships like rubber bands that adjust to the market 1. De-rate engine for improved grams/kwh 3. Cut out one turbo charger & slide injectors 5. Tune Engine with electronic control system 7. Improved trim management Crane Steering gear room Side rolling hydraulic hatch covers Hatch coaming No 4 hold floodable for extra water ballast in heavy weather 7 cargo holds, each with capacity for 12-13,000 m3 or 10 11,000 - tons depending on density of cargo being carried Anchor No 7 hold 12,200 m3 No 6 hold 13,000 m3 No 5 hold 13,000 m3 No 4 hold 12,300 m3 floodable No 3 hold 13,000 m3 No 2 hold 13,300m3 No 1 hold 12,600m3 Water line Prop shaft Main engine 12,670 HP at 89rpm Double bottom used for water ballast Corrugated bulkhead 14.2 metres draft 2. New propeller tuned to revised engine spec 4. Waste heat recovery system 6. Improved low load cylinder lubrication 8. Hull coatings, less ballast, air resistance etc. 225 m LOA, 77,000 dwt

27 Future Commercial Scenarios Higher cost is changing the economic balance and behaviour will change Things that did not work will now work, but it will take time and committment Charterers will become more fuel conscious. Look for the pressure points:- Direct consumption v indirect consumption Measurement of efficiency Marketing and public image

28 Gordon Moore Invented Moore s Law Fibre optic cable network

29 Future Tanker Sustainability 1. The last 50 years was hard and the next 20 years will be harder 2. Today s commercial system is ok but undisciplined 3. Geopolitical scenario means new competitors and new trades, but that s no big deal. Independent Shipowners take risks nobody else 4. The commercial model scenario wants to take and do a pretty good job needs work shipping lacks technical application 5. Transport performance & logistics must improve