2025

What attracted you to Tankers International?

I’ve worked in the maritime sector for over 30 years, and I’ve experienced some dynamic moments during my time. I’ve been lucky to work for a range of different and unique companies from small shipowners focusing on Panamax vessels to large trading houses like Trafigura.

It was during my role at Trafigura that I started to specialise in demurrage – an indispensable and yet often overlooked element of shipping. When I left there, I was looking for a role that recognised the importance of demurrage and Tankers International was a great fit.

It was an exciting time to join Tankers International when I started in 2001 with lots of travel to introduce our team. Since then, we’ve had some impressive achievements, for example increasing the fleet to 70 plus vessels and outliving most other VLCC pools!

Overall, the team at Tankers International is positive about the claims and demurrage role and the present leadership team, led by CEO Charlie Grey is aware of the benefit of how my skills and expertise add to value to the pool, which is very motivating!

Can you shed more insight into demurrage claims in the tanker segment?

Demurrage is all about detail and requires a skilled eye regarding documentation – it’s much easier today as this documentation now comes via email as opposed to hard copies being sent off in the post. This means that certain elements of the claims processing have improved.

But challenges remain. There can be a lack of calculation standardisation between the Charterer and Owner, and we have to negotiate based on the information we have available which may not always be all the facts. As a result, it’s often the grey areas that require experience and a certain amount of trust to reach an agreement.

It is also important to note that charter parties rarely change, with some original contract wordings dating back to 1977 and due to this there are occasions when we find ourselves trying to interpret a term which may have had a different application when first drafted. Of course most Charterers use additional clauses to cover such discrepancies and other operational situations which may arise, but these are not always written in the clearest manner and therefore can also be problematic.

In my opinion having a dedicated person to handle this complexity is a must. Yet, in smaller companies, demurrage is often  job-shared, with less priority placed on this important role, which risks missed revenue opportunities. We’re also seeing broader trends where demurrage teams are changing frequently, including new locations, which adds more challenges to claims settlement.

How does your role support Tankers International?

The claims and demurrage role will continue to evolve and remain vital. Over the years it has cemented its place as an integral part of shipping across all types of commodities. Whilst  some commodities, such as coal, are less impacted by this source of income, the VLCC sector is more greatly affected.

Demurrage rates of VLCC fixtures can reach six figures, making this a valuable post-fixture revenue element.  Under our contracts there is usually an allowance of five days to load and discharge the cargo meaning that with variables such as no room for the cargo, or waiting in the queue outside ports, demurrage is very often incurred.

As the world’s largest VLCC pool, we have the privilege of working with different Owners and Charterers on new routes and welcoming new vessels into our fleet. This requires new contracts to be finalised. Part of my role entails structuring the required laytime charter party clauses that this calls for.

How does Tankers International stand out in its approach to demurrage claims? 

Tankers International is a progressive company and this is reflected in the way it handles demurrage. We have a bespoke system that works out the calculation for demurrage, but this is supplemented by the expertise of the Tankers International team, which balances the Owner and Charterers’ preferences.

We are  transparent with regards to how we report demurrage collection information back to the pool partners, with biannual reporting on demurrage. If requested, we can also add value to our pool partners by advising them on demurrage claims based on our detailed database.

At Tankers International, we pride ourselves on negotiating  with new counterparties and developing new relationships. Our business is always changing  globally, and due to our size, we understand the importance  of having a dedicated person handling demurrage.

What have been your personal highlights during your time at Tankers International?

I would have to say a recent panel discussion at the Oil Operations & Demurrage conference was a real highlight. I was part of a panel, sharing my views and knowledge on the topic of Ambiguous Clauses in Sales Contracts and Charter Parties.  Most of my work is behind the scenes and getting out there to discuss this vital role with fellow professionals was a great experience – I look forward to speaking more on the subject to generate more awareness of the importance and value it can deliver.

Toni Sharp, Claims and Demurrage Manager

As the new year begins, Mette Frederiksen, Head of Research & Insight at Tankers International, shares her perspective on the 2024 market, leveraging insights from the pool’s proprietary fixture data. She also explores how oil and freight dynamics have reshaped the VLCC market over the past year, with predictions for 2025.

Reflecting on 2024

At the start of 2024, the global shipping industry saw encouraging signs and was optimistic about the year ahead. Key forecasting agencies projected strong oil demand growth, driven primarily by China and other nations East of Suez. At the same time OPEC’s production cuts seemed set to be counterbalanced by non-OPEC suppliers expanding their output, particularly in the Atlantic Basin West of Suez.

The temporary removal of Venezuelan sanctions also reshaped the market going into 2024, integrating previously sanctioned trades into mainstream operations while geopolitical events in other parts of the world caused disruptions and delays.

All these factors pointed to increased tonnemiles and vessel demand – especially for trading routes running West to East. With vessel supply stagnant or in decline, the basic principles of supply and demand suggested an upward trajectory for freight prices. However, the reality of 2024 did not fully align with these high expectations.

Oil demand growth

Throughout 2024, revisions from forecasting agencies downgraded global oil demand growth by approximately 400,000 barrels per day (bpd). This adjustment closely mirrored downward revisions to China’s growth forecasts, which dropped by more than half a million barrels through the year

China’s oil demand remains a key driver of tanker markets and in 2024, the impact on the VLCC sector was twofold: slower-than-expected demand growth dampened overall market activity, and increased reliance on sanctioned oil further skewed dynamics.

Approximately 2.7 million bpd of China’s seaborne imports in 2024 originated from sanctioned countries, including substantial volumes of Iranian crude. We also saw Russian crude following to China, but much of this bypassed the VLCC market, instead utilising smaller tankers. Overall, shadow fleet activity into China diverted around 20 VLCC fixtures per month from the mainstream market.

Despite these challenges, there are signs of potential recovery. In November, Chinese refiners began sourcing more non-sanctioned crude from the Middle East and West Africa. This shift reflects both increasing U.S. sanctions pressure and rising costs associated with sanctioned oil.

As we now enter 2025, agencies forecast global oil demand growth of 1.1 to 1.4 million bpd, aligning with long-term averages. This suggests that, while 2024 was challenging, the broader demand outlook remains stable.

OPEC+ vs. Non-OPEC production dynamics

OPEC+ remains a key influence, with plans to reintroduce 2.2 million bpd of voluntary production cuts over an extended 18-month period starting in April 2025. The phased return of these barrels, primarily from Middle Eastern countries, could add demand equivalent to 55 VLCCs if directed to Eastern buyers.

While OPEC+ kept voluntary cuts in place through 2024, non-OPEC production growth, particularly from the Atlantic Basin, remained robust. However, realised growth fell short of initial expectations due to slower-than-anticipated growth from Brazil and lower-than-expected US exports. Furthermore, with China not drawing as many barrels from the Atlantic Basin, Atlantic exports remained largely within the West of Suez region, leading to shorter voyages and lower tonnemile demand. Looking ahead to 2025, projected non-OPEC production growth of 1.1 – 1.7 million bpd, with the majority expected from West of Suez producers, could drive significant West-to-East oil flows, benefiting VLCC demand.

Tonnemiles and fleet development

2024 saw fluctuations in vessel demand, including an unseasonal dip in September and October, followed by a recovery in November. Overall, spot market demand ended the year around 5% below 2023 levels.

The VLCC supply side continues to be fundamentally positive:

• The orderbook remains historically low at just 80 vessels (8% of the trading fleet)
• The fleet’s average age has reached 12 years, with over 100 vessels now 20 years or older
• Over the next four years, the number of vessels exceeding 20 years will double, representing 21% of the trading fleet.

With only 80 newbuilds in the pipeline, the effective fleet size is poised to decline as older vessels become less efficient. Add to this a large pool of older, exit-ready ships, the medium-term fundamentals are promising.

Looking forward into 2025

The market dynamics of 2024 resulted from a convergence of small events that collectively enforced downward pressure on freight rates. However, the fundamentals for 2025 suggest a more optimistic outlook:

• Non-OPEC supply is projected to have strong growth, and most of this is West of Suez
• OPEC+ production is set to gradually return to the market, potentially bolstering VLCC demand
• Geopolitical challenges remain a persistent factor, contributing to inefficiencies and supporting tonne-mile demand
• Fleet constraints could lead to an effective decline in vessel availability, exacerbating market tightness.

The main wildcard remains China. Both the growth of its oil demand and its sourcing patterns will be crucial in determining the trajectory of VLCC demand. If fundamentals align, 2025 could mark a significant turning point for the freight market.

Tankers International remains cautiously optimistic; we believe that 2025 holds the potential for a market recovery driven by robust fundamentals and a balanced fleet dynamic.