OPEC+ has announced a decision to extend its voluntary production cuts by another month. This means that the 2.2 million barrels per day of additional supply, will now be phased in starting from January 2025. This gradual increase of approximately 180,000 bpd per month is a positive development for the VLCC market.
Historically, OPEC production, particularly from Middle Eastern producers, has shown a strong correlation with VLCC cargo counts. With OPEC+ withholding supply, the VLCC market has faced considerable pressure, so the upcoming return of this production, which is predominantly from Middle Eastern members of the alliance, is a positive development.
The additional 2.2 million barrels per day, phased in over 12 months, could require an additional 55 VLCCs to transport the increased volume of Middle Eastern crude if it all heads to destinations east of Suez. This is a significant boost for the VLCC market outlook for 2025.
I’m a chartered accountant, and I qualified working in audit for Moore Stephens, with Tankers International being my first audit. Auditing Tankers International every quarter for nearly four years gave me a great sense of the company, and I was genuinely impressed with the entire team, from the senior leadership to operations.
After four years, it became clear that it stood out among the many companies I audited. I was particularly impressed with its IT, which, due to being both bespoke and well supported ensured data could be analysed in a variety of ways and reporting streamlined. This, combined with the tangibility of the VLCC market, its global presence and the pooling model all contributed to it being an interesting business to work for.
After one of my last audits, a member of the Tankers International team invited me for a coffee, and I was offered a role at the company. It wasn’t just a like-for-like role; the fleet was expanding at the time and they wanted me as a person and were prepared to build a role for me. I knew from my experiences interacting with the team during the audit that they treated their employees well and valued relationships.
How does your role support Tankers International?
The role is a real mix that keeps me on my toes. It involves financial reporting at month-end, annual reporting, and treasury management.
Working hand-in-hand with Pool Partners is a key element of my role. We use a mix of accounting software and bespoke reporting tools to ensure timely responses to their requests. In addition, a number of our Pool partners are listed companies which requires more stringent reporting and increased internal compliance which is where my background in audit allows me to add real value.
My role directly supports our Pool Partners’ ability to successfully navigate the decarbonisation of shipping. In 2020, for example, the IMO sulphur cap came into force, directly impacting the Pool from a financial reporting perspective. Due to new fuels, technologies and diverging partner strategies for navigating these regulations we had to adapt the way we pooled vessels to accommodate scrubber fitted vessels. We make absolutely sure that the ramifications of any operational changes are looked after from a financial reporting perspective.
What is coming ahead for the pool?
How our Pool partners choose to reduce their carbon footprint and adapt to global regulations ensures that there are always new and interesting challenges for the Pool. As a chartered accountant, I add most value to my role when interpreting how these may impact our business and how I can work collaboratively with our stakeholders to ensure we continue to produce meaningful and timely reports on the financial data they need.
Take EU ETS for example; we are required to buy EU Allowances (EUAs), which are a type of carbon allowance that allows companies covered by the EU ETS to emit a certain amount of CO2e, on behalf of Pool Partners.
With EU ETS and the EUAs, it’s essential that we take a joined-up approach, both within our organisation and in collaboration with Pool Partners. We need to cooperate closely to understand how partners want to manage their EUA exposure and their holding of EUAs. All of these must be backed up by robust reporting and processes that are transparent for both participants and auditors.
What have been your personal highlights during your time at Tankers International?
A stand-out moment for me during my time at Tankers International has to be adapting to auditing during the COVID-19 pandemic. Prior to the pandemic, we worked in the office five days a week, and the filing system was paper-based. This meant documents were printed out, stamped up for approval, and filed accordingly.
The pandemic then hit, and we had to adapt our processes almost overnight to ensure that all documentation was filed digitally. It was a testament to Tankers International’s culture that there was immediate buy-in to make this happen quickly, plus the talent to make it a reality.
When it came to our first audit with these new processes, the audit went smoothly, with all documents found and shared on time, and no challenges from the auditors. These processes continue to this day, and have been robust throughout every audit, and have allowed us to adapt to a more flexible working environment.
Last month, the team at Tankers International participated in a 15 km London Maritime Walk from the IMO to the Cutty Sark in support of our incredible charity partner, Mercy Ships. Together, we set out not just to raise awareness, but also to generate vital funds for a charity that delivers life-saving medical care and training to some of the most vulnerable communities globally. Through donations made both online and offline plus gift aid, we have raised a £10,000!
Mercy Ships operates hospital ships that travel to regions with limited healthcare infrastructure, providing essential medical services to those who need it most. This charity and its cause hold a special place in our hearts, with our CEO, Charlie Grey, leading the Mercy Ships London committee, working to highlight the work of the charity within the capital’s wider shipping community. Earlier this year, Charlie and other committee members travelled to Sierra Leone, to witness first-hand the transformative impact of Mercy Ships’ work, a trip that was disrupted by an alleged coup attempt, but also gave the team great insight into the immense impact of Mercy Ships from life-saving surgeries to medical training for local healthcare workers. However, it also underlined the critical need for continued and generous support. Thankfully, our walk wasn’t disrupted by a coup attempt, although we had our own set of challenges to deal with on the day!
On 26th of September, we swapped our office attire for walking gear and, joined by representatives of Mercy Ships UK, we set off bright and early with our colourful Mercy Ship t-shirts and sunny sky outside the IMO HQ. Spirits were high, and our route took us past some of London’s most iconic maritime landmarks along the river Thames.
As we passed Tower Bridge and St Katharine Docks Marina, the weather took a dramatic turn, and torrential rain descended upon us, forcing us to seek cover under doorways as makeshift shelters. Sadly, even with our well-equipped raincoats, gear and warnings to be prepared for wet weather, we were all absolutely soaked through! Despite the sudden downpour, we pushed on, determined to complete the walk for such an important cause.
At one point, the rain was so heavy that we took shelter in a local community centre in Deptford, where the members of the centre greeted us and welcomed us in. They recognised the Mercy Ships logo on our t-shirts and shared their own admiration for and personal stories of the charity’s work. This simple act of kindness was a reminder of how widely Mercy Ships’ mission is respected, and how many people are inspired by the incredible work it does.
One of the most heart-warming aspects of the walk was the support we received from the general public. As we made our way through the city, people noticed our Mercy Ships t-shirts and stopped to offer words of encouragement. Some even asked how they could contribute to the cause.
Our route took us past some of London’s most iconic maritime landmarks:
Tattershall Castle – Once a ferry on the River Humber, now a floating pub on the Thames.
HQS Wellington – A WWII Royal Navy ship, now home to the Honourable Company of Master Mariners.
The Golden Hinde – A replica of the ship Sir Francis Drake sailed around the world.
HMS Belfast – A WWII Royal Navy cruiser turned floating museum.
The Mayflower Pub – A historical pub marking the departure of the Pilgrims to America.
Pageant Stairs Obelisk – A riverside landmark near Canary Wharf.
Greenland Dock – A former Arctic whalers’ base, rich in maritime history.
Cutty Sark – A 19th-century tea clipper now preserved in Greenwich.
Participating in this walk was more than just a physical challenge, it was a chance to make a difference in the lives of those less fortunate. As our walk took us past St Thomas’ hospital, it was a stark reminder that the illnesses that bring many of the patients to Mercy Ships for treatment are avoidable in the West and how the work of the charity is essential, offering urgent medical care but also local training to the community, ensuring that they have the necessary skills to provide these treatments locally once the hospital ship sets sail for its next destination.
If you feel inspired by the work of Mercy Ships and want to join us in making a difference, please consider donating via our fundraising page. Running one of its two hospital ships takes nearly $100m a year and your contribution, no matter the size, will help provide critical medical care to those who desperately need it.
This experience was truly unforgettable, bringing together the team, our shared maritime heritage, and our commitment to supporting a wonderful cause.
Together, we can make an impact. Thank you for your support!
Pool partners benefit from supercharged fuel procurement strategies
London, 2nd October 2024: Tankers International, a leading VLCC pool in the shipping industry, has appointed Stephen Robinson to head up its bunker desk. With decarbonisation and efficiency both high on shipping’s agenda, fuel procurement strategies are central to managing the energy transition and future proofing energy security.
Robinson will be UK-based and brings many years of experience to the business, having previously worked as managing director for both Bomin and Cockett Marine Oil. Over his career, he has developed an in-depth understanding of both the trading and physical supply of fuels. He has a solid technical background in terms of fuel procurement, management and hedging, and has long, established relationships with many physical suppliers – an advantage for Tankers International when developing and maintaining credit lines.
Matthew Smith, Chief Operating Officer, Tankers International, said: “Stephen Robinson brings with him a wealth of knowledge and strong relationships which he has developed over many years on both the trading and supply sides of the bunkering world. With decarbonisation so high on the shipping agenda plus the emerging alternative fuels landscape, this has never been more important. We’re excited to have someone of his pedigree supporting our pool, focusing on realising the growing competitive advantage that an effective fuel strategy has to offer, and adding true value to our partners when it comes to fuel procurement.”
Stephen Robinson, Head of Bunker Strategy & Procurement, Tankers International added: “While Tankers International has always provided this service to pool members and has established solid credit lines, with the emergence of alternative fuels, the uptake of new ship technologies, and multiple regulatory changes, the time is right to supercharge its bunker desk offering. Fuel constitutes a major portion of operating costs and fuel procurement is becoming increasingly complex. I am looking forward to working with pool partners to manage fuel strategies, realise efficiencies, and reduce costs.”
With the addition of Stephen Robinson, Tankers International expands another service offering, providing an additional source of knowledge and expertise that pool partners have ongoing access to. Partners also have access to its VLCC fixture app – the only publicly available source of fixture data for the global VLCC fleet.
Tankers International welcomes Wah Kwong’sVLCC Hong Kong Spirit, taking the pool to 36 vessels
London, 18 September, 2024: Tankers International, the world’s largest shipping pool for VLCCs, has welcomed Hong Kong based Wah Kwong as a pool partner, with the Hong Kong Spirit (IMO: 9602289) joining the scrubber pool.
The Hong Kong Spirit joined the VLCC pool in September 2024. The vessel was built in 2013, maintaining the pool’s average fleet age of 11.2 years.
Wah Kwong is an integrated global vessel owner-operator based in Hong Kong. It manages a modern, efficient fleet spanning bulk carriers, crude tankers, LPG tankers, container ships, and tonnage ranging from 4,000 to 318,000 DWT. The company was founded in 1952 by T.Y. Chao and is still managed by the third generation of the Chao family. As a pool partner, Wah Kwong will access a larger and more diverse customer base and cargo portfolio, market-leading insights, and support for compliance with environmental regulations.
Charlie Grey, CEO of Tankers International, said: “Wah Kwong’s decision to join our VLCC pool is a clear signal that pooling provides tangible benefits to our partners. From improved cash flow and revenues, fairer charter party terms, plus access to a wider customer base and market intelligence, pooling simplifies a shipowner’s role. Wah Kwong contributes yet another layer of excellence to our information sharing culture between world-leading shipowners, supporting pool members with both environmental compliance as well as commercial advantages.”
Will Fairclough, Managing Director of Wah Kwong added: “Shipping is a volatile industry, and we are always striving to provide a hedge against sector risks. We have been impressed by the Tankers International team’s ability to help us take advantage of market upsides while delivering stable and regular cash flow. We look forward to collaborating with other industry-leading shipowners to ensure healthy returns, and accessing the market data and industry intelligence that comes from being part of the Tankers International Pool.”
The addition of Wah Kwong to the Tankers International VLCC pool follows the MT Felix and MT Symphony which joined earlier this year.
I’ve always been fascinated by data and turning it into something commercially useful. This interest led me to pursue a master’s degree in business analytics at the University of Southampton. Here, I got to grips with the theory behind how data can make a meaningful impact, in addition to practical data visualisation tools such as Power BI.
Straight from university, I landed a role at AirAsia as an analyst. It was there that I started translating my knowledge of and passion for data into insights that could inform business-critical decision-making. I look back and see many similarities between aviation and shipping, for example understanding performance and trends on vessel and airline routes and creating dashboards that can tell the right story.
It was an initial meeting with Mette Frederiksen, Head of Research & Insight that sold the opportunity to me. I immediately aligned with Tankers International’s mission and values and was excited by not only the volume of valuable data but also the company’s approach to translating and sharing it with Pool Partners for their commercial advantage.
What have been your personal highlights during your time at Tankers International?
I wanted to find a role that allows me to make a tangible, meaningful impact. At Tankers International, I felt I had this opportunity right from the start. For instance, I’ve been able to translate data into insights that have made a genuine economic difference to the Pool’s performance. As part of TI’s in-house data team, we are building dashboards from scratch and on demand. It’s not just a ‘nice to have’ for TI; the qualified data is used across the organisation, from the chartering desk to the operational team, to assist sound decision-making.
How does your role support Tankers International?
Data is at the very heart of Tankers International. But, raw data alone does not provide meaningful insights. As a data analyst, my role is to act as the bridge between data and insights.
On a typical day, requests come in from across the organisation. On the commercial side, these requests can be anything from comparing and contrasting the performance of different vessels or routes, to understanding how trade patterns change over time. One example is a Time Charter Equivalent (TCE) tracker dashboard that we’ve developed, which helps the team monitor the TCE throughout the voyage and understand the performance of a vessel.
We also get requests from the finance department. Currently, we’re working on a tool that will enable the team to review the Pool’s financial performance from different dimensions. Using digital tools, we can pull together information from several siloed platforms into one dashboard to create a single view from which decision-makers can view all relevant information.
What can we expect to see from Tankers International in 2024 and beyond regarding the use of data and digital tools?
It’s a case of Tankers International continuing to walk the walk when it comes to the use of data and digital tools. Being wholly focused on the VLCC segment and collecting 40+ data points for every VLCC fixture in the market puts us in a unique position to collate and share genuinely transformative insights. Much of this is to the benefit of our Pool Partners through more efficient trading of our own fleet, but it also allows us to continue the development of our VLCC fixture app to add more transparency to the VLCC market as a whole. This follows recent updates to the app, such as the introduction of Baltic Exchange data and Carbon Intensity Index (CII) data.
How does Tankers International differ in its approach to data?
Data and technology alone can’t deliver maximum institutional value. It requires the human touch, which is why TI has invested heavily in a dedicated research and insights team. As a company, we have also invested in internal solutions, including digital technology, that bring together data streams from various platforms to present an integrated data visualisation tool for decision-makers across the organisation. It’s the human knowledge and experience combined with the software, tools and technology that sets Tankers International apart when it comes to data intelligence.
A Vietnamese-based Shipping Company joins with two VLCCs, taking the pool to 35 vessels
London, 13 August 2024: Tankers International, the world’s largest shipping pool for VLCCs, has welcomed a Vietnamese-based shipping company as a pool partner, with the MT Felix and the MT Symphony both joining the pool.
The Felix joined the VLCC pool earlier this year, while an additional vessel, the Symphony, recently joined the pool early this month. These additions will bring the Tankers International Pool up to 35 vessels. Both vessels are equipped with scrubbers.
Charlie Grey, CEO, Tankers International, said: “The decision to join our VLCC pool represents a significant achievement for Tankers International. We continue to expand our economies of scale and network, further optimising the TCE for our partners.”
Grey continued: “These new additions bolster our ownership diversity and demonstrate that the pool continues to attract top-tier owners. This further improves our ability to support financial performance, providing owners with access to a larger and more diverse customer base and cargo portfolio. Our owners continue to benefit from exposure to all market cargoes and our multiple relationships across the VLCC tanker market, which gives us unparalleled access to market data and industry intelligence.”
Experience and intuition has served the shipping sector well and will continue to do so. That said, the tanker industry understands the potential of data to inform even more confident and commercially astute decision-making.
There are numerous off-the-shelf solutions for a range of vessel types and brokers are supporting shipowners’ and charterers’ needs with investment in market research teams. However, more data doesn’t necessarily mean good data – it is at best useless and at worst misleading without correct interpretation. This is why data analysts are increasingly commanding a seat at the top table, as recognition of the power of these insights grows.
Maximising the institutional value of data can be a difficult task. The biggest challenge is often ensuring that decision makers are practically able to access, understand, and cross-check different types of data that they have access to at critical times. Data streams are often accessed through several different platforms and provide information in different formats. Switching between data in raw number format while other information is found in fully developed dashboards only adds complexity.
The VLCC industry is no different to any other in that the volume and history of data combined with human insight creates maximum accuracy, trend interpretation, and impact. However, in a segment where the average shipping company only owns a few ships, how can all VLCC owners and operators carve out the resource to benefit from data and digitalisation? Moreover, data is not infallible; experience in spotting when it’s supporting the right decision or not counts. Being part of a Pool provides owners with access to an experienced team with access to large volumes of data that can be expertly distilled and – critically – correctly interpreted to deliver insights that provide genuine competitive advantage.
At Tankers International we have a commercial fixture database housing close to 25 years of data, amounting to more than 100,000 recorded voyages, with 40+ data points allocated to each voyage. These economies of scale allow us to access and interpret a large volume of accurate data and present meaningful insights to all our Pool partners; enabling them to make informed decisions. Having an in-house team of data analysts means that bespoke tools can be created for each department – or the segment as a whole – be it an operational optimisation tool, a post-fixture claims tracking tool, or a VLCC Fixture app.
We have invested in internal solutions that bring together data streams from various platforms to present integrated data visualisation tools for decision makers across the organisation. They all have the ability to pull data from multiple sources to draw instant parallels and conclusions, driving efficiency across all departments and ultimately improving the bottom line.
It’s knowledge and experience combined with software and technology that sets Tankers International apart when it comes to data intelligence. This information exchange is providing our Pool partners with the tools to improve operations today, and future proof their organisations for tomorrow.
By Mette Frederiksen, Head of Research & Insight, Tankers International
As the first half of 2024 draws to a close, the VLCC market presents a picture of moderate improvement without the dramatic boom witnessed in other tanker segments. While freight rates have exhibited a steadier trajectory compared to the volatility of 2023, peak levels haven’t quite reached the heights anticipated. But at the same time, the lows haven’t dipped as drastically either. That being said, all the right factors are in place, and the VLCC segment taking part in the super cycle is a question of when, not if.
Fundamentals
The underlying fundamentals supporting the VLCC market remain largely unchanged since the beginning of the year. The key driver continues to be a lack of fleet renewal, with minimal new deliveries offset by a significant number of vessels exceeding their traditional 20-year lifespan. Scrapping activity and other forms of vessel retirement have remained subdued due to a period of relatively strong returns and optimistic market outlooks. Additionally, the growth of the “dark fleet” persists, providing an alternative outlet for these older ships. Comparing an orderbook-to-fleet ratio of just 7% to an older fleet representing 21% of the trading fleet, the fleet profile is supportive of a tightening tonnage balance.
The recent effective closure of the Suez Canal and the wider Red Sea area, which significantly impacted product tanker markets, has had a relatively muted effect on the VLCC sector. The inherent nature of the VLCC market, where historically only a limited number of vessels utilise the Suez Canal, has meant limited disruption to the segment and a mere 4 VLCCs equivalent increase in demand due to the rerouting. This is where the product tanker segment has found surging support over the past 6 months.
The ongoing Russia-Ukraine conflict continues to play a crucial role in shaping all tanker markets, including VLCCs. Russian oil continues to be diverted to buyers outside Europe, prompting Europe to source supplies from alternative sources like the US, West Africa, and the Middle East. This dynamic translates into more inter-Atlantic trading, where VLCCs become competitive when freight economics permit. This does not necessarily mean longer tonne miles, but these routes provide access to more creative trading opportunities and allow owners to triangulate vessels and optimise their fleets.
OPEC+
The Middle East to Far East route remains the backbone of the VLCC market. While OPEC+ production cuts have restrained oil flow from the Middle East region, positive signals are on the horizon. Recent announcements from OPEC+ on their production management strategies pointed to a gradual phase-in of previously curbed production volumes starting in October. The group plans to add 2.5 million barrels per day over the following 12 months. This includes bringing back 2.2 million barrels of voluntary cuts and allowing the UAE to raise production by 0.3 million barrels per day. Additionally, the market anticipates a rise in incremental supply from Atlantic basin producers such as the US, Canada, Brazil, and Guyana. As incremental demand is expected to remain concentrated in the East, this scenario translates into long tonne mile demand for VLCCs.
The positive news continues, with forecasting agencies all projecting a rise in oil demand over the year and, in particular, during the second half of 2024 compared to the first. Much of this hinges on China fulfilling the robust demand projections predicted for the nation. China’s leadership has set itself an ambitious economic growth target and is taking proactive measures to achieve this. Historically, this proactive approach is closely linked to growth in oil demand and, importantly for the VLCC segment, a rise in oil imports. Furthermore, the optimistic demand outlook from the forecasting agencies point to growth in the Call-on-OPEC, which aligns with OPEC+ plans for a phased production increase.
The VLCC market has shown resilience in the first half of 2024. While not experiencing the dramatic boom of other tanker segments, it has exhibited steady growth with positive indicators for the remainder of the year. Stronger demand growth, the return of some OPEC+ production and continued geopolitical influences are all factors to monitor as the market navigates the second half of the year. We remain optimistic that the VLCC segment will find its moment to enter the stage and take an active part in this year’s super cycle.
The past couple of years have seen a notable uptick in drydocking activity for older tankers. This trend coincides with the well-documented growth of the shadow fleet, raising questions about safety and environmental compliance. Our proprietary data indicates that in 2023 more than 40 VLCCs aged 18 years and older went through a drydock.
Traditionally, older vessels nearing the end of their operational life would be scrapped for parts or metal. However, the emergence of the shadow fleet, a collection of older tankers operating outside of traditional regulations and oversight, appears to be altering this dynamic.
The increased profitability of operating older tankers, particularly for transporting sanctioned cargoes outside the mainstream tanker market, is incentivising owners to invest in drydocking vessels. The high cost of a drydock is often seen as a precursor to scrapping, but in the current climate, it seems that some owners are opting to extend the life of their assets and capitalise on the shadow market.
This trend presents a unique challenge for the industry. The shadow fleet raises concerns about safety and environmental compliance. Classification societies and regulatory bodies have withdrawn their support for vessels trading in sanctioned trades, as has the insurance community. This means less oversight on maintenance and assurance that minimum operating standards are met.
Part of the trend could, of course, also be explained by the highly positive outlook for the mainstream tanker markets in the next couple of years. We, and many other market stakeholder, are confident that a combination of limited fleet growth and explanding tonnemile demand for large crude tankers will support a healthy freight environment in the medium term, leaving owners to want to hold on to tonnage that might historically be divested.
Looking deeper into the data we do find some mainstream owners drydocking older vessels. However, in the time frame covered, we note that 80% of the vessels that went through a drydock aged 18 and older are being traded in the shadow fleet. This would suggest that the drydocking trend of the older fleet is predominantly driven by the rise in the shadow market.
