All Posts By

Mette Frederiksen

Tankers International partners with Baltic Exchange to enhance its popular VLCC Fixture app

Latest data sharing collaboration to increase transparency for market stakeholders.

London, 28th November 2023 – Tankers International, the world’s leading shipping pool for VLCCs, today announced that it will be partnering with the Baltic Exchange to further enhance data sharing and the provision of market insights for its popular VLCC Fixture app.

Paid app subscribers will benefit from access to Baltic Exchange benchmarks and forward curves in addition to the current data offering, which includes information on bunker prices, fixing rates, laycan, demurrage and commissions as well as a full breakdown of TCE calculations. Subscribers can also access cargo forecasts and receive real time fixture notifications via WhatsApp. There is also an option to receive fixture data via an API feed to integrate directly into own systems.

The data sharing agreement will provide even greater quality insight and real-time updates for app users and will continue to support market stakeholders in understanding the current developments of the global VLCC market.

First launched in 2014, the Tankers International VLCC Fixture app is the only publicly available source of comprehensive fixture data for the global VLCC fleet and provides wider market access to data that was once only provided to a select few brokers. The app has continued to expand in popularity since it was re-launched in December 2021, as more data points and market insight have been made available to subscribers.

Charlie Grey, Chief Executive Officer, Tankers International, said: “The dynamic nature of our market today means that shipowners, charterers and brokers all need quality data faster to support their decision making. Our partnership with the Baltic Exchange will enable even greater collaboration on real-time information that’s used by both our pool partners and our wider app subscriber base. Our subscribers extend to multiple stakeholders across the supply chain, from media to analysts and market investors. We’re pleased to partner with such a renowned institution regarding trading data and look forward to providing even greater insight into our sector.”

“We are pleased to welcome Tankers International as official members of the Baltic Exchange. We have been providing assessments for the tanker market for more than 25 years and continue to partner with like-minded and valued operators in the tanker sector to ensure our benchmarks remain at the heart of the global shipping industry. I look forward to many years of close dialogue with the team at Tankers International,” said Mark Jackson, CEO of Baltic Exchange.

The Tankers International VLCC Fixture App can be downloaded as an ‘in-browser’ app here.

Sanctions no more: A new era for the tanker market?

In an unexpectedly lenient move, the US announced last week that sanctions against companies trading in Venezuelan oil will be dropped. This provides an opportunity for a reshuffling of oil movements, particularly in the Atlantic basin, and with that comes a renewed focus on VLCC employment and impacts on the ‘dark fleet’.

As its sanctions are removed, Venezuela can produce and export its oil freely. Discounts on the price of its crude will likely disappear, turning a significant amount of oil away from the dark trade and into mainstream markets. The sanctions are not lifted indefinitely, however. There is currently a time limit of six months in place on the sanctions relief to ensure that the Venezuelan government lives up to its end of the bargain to allow free and fair elections next year.

The oil sector in Venezuela has been heavily impacted by the sanctions, which have been in place since 2019. Oil production has dropped from highs of 2.5 million barrels per day to current levels of around just 800,000 barrels per day. The sector has suffered from years of under-investment and mismanagement, and any production ramp-up is unlikely to be quick. Forecasting agencies anticipate a limited recovery in oil production, but most agree that we will see a significant change to the flows from Venezuela.

We have seen around 400,000 barrels per day of seaborne crude and condensate flows from Venezuela this year. Just over half of these barrels are lifted on VLCCs, albeit with a portion of this marked as estimated liftings, as much of this happens on dark or grey vessels that are not all trackable via AIS. The Tankers International fixture data counts 5-6 liftings from Venezuela per month this year, most performed on dark fleet vessels with an average age of 18.3 years. Much of the sanctioned crude has been going to China, where teapot refineries have benefitted from the price-discounted supply. The recent easing of the sanctions has seen some supply head to the US and a small amount go to Spain.

As full sanctions relief is implemented, more Venezuelan crude is expected to flow to the US and Europe, with many US refineries built specifically to run on Venezuelan molecules. This could replace current US imports from the Middle East. However, the volume on that trade has not been substantial to the tonne-mile equation through 2023, and the VLCC segment accounts for roughly 3 liftings per month. The increased flow of crude from Venezuela to the US and Europe will boost demand for the Suezmax and Aframax segments.

A more significant impact on the VLCC market will come from current Venezuelan crude receivers having to find alternative supplies. Smaller Chinese independent refineries will lose access to cheap Venezuelan oil and may attempt to increase purchases of discounted Iranian and Russian barrels. As this is already a saturated market, supplies from Brazil and Colombia will likely satisfy any shortfall. This is a positive side effect, as the trade route from Brazil to China is predominantly a VLCC route.

A further implication will be that the trade route reshuffle will mean a return to the mainstream tanker fleet to lift the crude. The US and Europe will not welcome dark fleet vessels, and the same is the case for any additional VLCC loadings in Colombia and Brazil. A VLCC roundtrip from Brazil to China takes around 95 days to complete, so each additional monthly lifting on this route would employ 3 VLCCs full time. This means that if the current 5-6 monthly cargoes from Venezuela to China shift to load on mainstream VLCCs from Brazil, it will add demand for 15-18 mainstream vessels. This shows the potential scale of the impact of moving these oil flows into the conventional tanker market.

As Venezuelan sanctions are lifted for the first time in nearly 5 years, the market will be impacted in new and multiple ways. To stay informed on the latest market insight and data, download our app here:

Tankers International welcomes new pool partner Kuwait Petroleum Corporation and additional vessel from TRF

Kuwait Petroleum Corporation joins the pool, marking growth milestone.

London, 19th October 2023 – Tankers International, the world’s largest shipping pool for VLCCs, has announced today that two VLCCs have joined the VLCC pool, with an additional vessel due imminently.

One VLCC, owned and operated by Kuwait Oil Tanker Company (KOTC), a subsidiary of state-owned Kuwait Petroleum Corporation (KPC), has joined the VLCC pool, while another vessel from KPC is expected to join later this month. Meanwhile, existing pool partner Transportation Recovery Fund (TRF) has added another vessel – the Eco Seas – to the specialist VLCC Scrubber Pool. This brings the total fleet size to 66.

With ownership in 39 ships across the product, crude, LPG, and bunker segments, KPC is a top 10 oil major with a substantial footprint in the Middle East. It will now be able to access support towards compliance with existing and future regulations and unlock efficiencies and commercial advantage through Tankers International’s pool. KPC will also benefit from enhanced charter party terms, market intelligence and a collaborative approach to data insights via Tankers International’s independent and transparent management service.

“KPC’s vessels are a significant addition to our pool’s efficient, and diversified fleet, and reflect the ambitions of the pool,” said Charlie Grey, CEO of Tankers International. “Adding KPC to the pool provides our partners access to KPC’s cargo base, as well as adding another layer of data and insights into the oil markets in the region.”

KPC commented: “We have set ourselves the target to be a world leader in marine transport, and becoming a member of the Tankers International VLCC pool will further enable us to achieve this. The pool offers a great depth of market information and knowledge-sharing opportunities amongst gold standard owners, and we are looking forward to collaborating with the other partners.”

TRF joined the Tankers International VLCC pool in June 2023 with the addition of TRF Horten. The second vessel from TRF of the Eco Seas (DWT 299,998 MT / Built 2016), will reduce the average age for the scrubber pool, enabling Tankers International to offer modern, higher-performing vessels to the industry.

Grey continued: “TRF’s addition to the pool only improves Tankers International’s ability to offer top-quality vessels to the industry. We’re proud that our professionalism and experience are reflected in their vote of confidence, and the pool will benefit from younger tonnage with better earnings distributed across the members.”

Michael Aasland, CEO of TRF Ship Management, said: “Since our first addition to the pool, we have been impressed with the team at Tankers International’s determination to deliver value. We have achieved strong financial returns in the near term, leading us to add another vessel to the pool.”

Miles and smiles: the west to east trade is providing VLCCs with long tonne-miles as market fundamentals rebalance

The Atlantic basin is providing massive support for the VLCC tanker market. Growing supply from the region means long tonne-miles across the Atlantic as much of the oil is being shipped to the Far East. In the Far East, we continue to see demand from China ramping up after COVID lockdowns. While the market’s expectations for China were perhaps too optimistic to begin with, we are still seeing signs of recovery, and oil demand remains healthy and likely to improve progressively. Furthermore, despite weaker economic data and somewhat depressed market sentiment in recent weeks, major reporting agencies have not made significant downward revisions to oil demand forecasts yet.

Low vessel supply growth is adding to the good news for shipowners. Despite an ageing fleet, shipowners remain reluctant to place newbuild orders, with not a single VLCC to be delivered in 2024 and only one ship in 2025 and one in 2026.

This shortage in newbuilds is allowing market fundamentals to rebalance after the massive drop in demand of the COVID years. Even the production cuts announced by OPEC+ nations such as Saudi Arabia have not dampened the mood. Rather, the capped volumes are expected to be filled by producers such as Brazil, resulting in more long tonne-miles for VLCCs across the Atlantic to Asia. The Chinese market is huge and is one of the key drivers of the VLCC market, and the resumption of trade there is countering other market concerns.

Historically in the freight market, we have seen VLCC rates putting pressure on Suezmax rates, which have then put pressure on Aframax rates. However, since the invasion of Ukraine, this trend has largely reversed. Aframax and Suezmax rates spiked initially when some owners took the risk of shipping Russian crude. As freight levels in the smaller tanker segments rose to historical highs, the VLCC segment became competitive in markets that it has not traditionally traded in, such as West Africa and US Gulf to European destinations. This has given VLCC owners optionality. They can choose to keep their vessels local in the West or trade them longer-haul on the traditional routes to Asia, depending on their views on the freight market.

The VLCC market has been seasonal in the past, with high rates in winter and lower rates in summer. However, this pattern has weakened over the last few years, and this year in particular, we are experiencing sound second-quarter results that have kept the market buoyant amidst the borderline recession in some parts of the world and the lingering macro-economic effects of the pandemic.

In 2023, Brazil introduced a new freight tax, which caused oil exports to drop dramatically. Oil companies reduced or halted their VLCC export programmes rather than paying the additional costs. This decision appears to have coincided with an increase in West African VLCC fixtures to meet part of the demand, particularly from China, with West African fixtures in June increasing by at least 50% month-on-month.

The demand for high oil volumes from Africa over long tonne-miles to China has been good news for VLCCs. The oil export tax in Brazil is due to end in July, and the Brazilian market is likely to resume, and while this may remove some VLCC trade from West Africa, it is still long tonne-miles for VLCCs.

The prominence of the Atlantic basin trade for VLCCs is therefore set to continue to keep shipowners smiling well into the next quarter.


Source: Tankers International

Transportation Recovery Fund joins Tankers International VLCC Pool as demand for diverse fleets continues

Tankers International’s specialist Scrubber Pool increases in size, reduces in average vessel age.


London, 21st June 2023 – Tankers International, the world’s largest shipping pool for VLCCs, has announced today that Transportation Recovery Fund (TRF) operated vessel the TRF Horten has joined its specialist VLCC Scrubber Pool.

The TRF Horten (297,638 DWT / Built 2018) was delivered to Tankers International on 4th June. The total size of the Tankers International fleet now stands at 65 VLCCs, and the specialist Scrubber Pool has increased in size to 37 vessels.

The addition of the TRF Horten has reduced the average age for the scrubber pool to seven years, in contrast to the industry average of 10.7 years, as a part of Tankers International’s mission to replace old and less efficient tonnage with modern and cleaner vessels.

With ownership in 19 ships in the chemical and crude segments, TRF will benefit from a transparent and cost-effective solution to maximise earnings in the spot market through Tankers International’s powerful economies of scale and unparalleled access to relationships and cargoes. TRF will also benefit from more streamlined operations, consistent cash flow, and high-level information sharing associated with Tankers International’s pooling model.

In response to the growing diversification in the VLCC fleet, Tankers International have created a number of sub-pools to reflect unique trading patterners and earning potential to ensure fair sharing of earnings and costs between similar vessel types. For instance, the Tankers International Scrubber Pool functions as a sub-pool operating from a unique financial and commercial perspective while sharing resources across the entire Tankers International fleet.

“The addition of the TRF Horten further improves our pool’s unrivalled strength and depth, delivering clear benefits for TRF and our other Pool partners,” Charlie Grey, CEO of Tankers International, said. “It also represents an exciting opportunity for us to develop a closer relationship with TRF, which offers value to the pool with its knowledge, experience, and expertise. TRF’s decision to join the pool is a statement of trust in the pool’s ability to adapt to changing markets and ensure that all partners are optimised for the future.”

Michael Aasland, CEO of TRF Ship Management, added: “We applaud Tankers International’s reputation for professionalism, trustworthiness, flexibility and service with its experienced management team and relentless focus on driving value for pool partners. We look forward to improved cash flow and revenue as part of a mutually beneficial partnership that sees strong financial returns in the near and long-term.”

How tanker pools help with CII

If you put your tankers in a pool, it can help you navigate CII, such as from making sure any vessels under risk of being downgraded are kept away from potentially CII damaging charterers, and managing the CII data. Charlie Grey of pool operator Tankers International explains.

CII will push VLCC owners into new territory as they tackle shipping’s first true decarbonisation regulation. Arguments between shipowners and their charterers are simmering with BIMCO caught in crossfire. Regardless, CII is here now, and tanker shipping needs to comply. But how? CII represents the first global carbon emissions regulations applied to the international shipping fleet – something the industry needs to implement if shipping stands a chance at hitting the IMO’s emissions targets.

Yet, CII is not perfect and has several well-documented flaws.

For instance, while installing low-carbon technologies will make a passing grade easier, a highly efficient vessel will not necessarily have a good rating. A highly efficient vessel that sits at anchor for several days will require bunker fuel to power its generators, emitting CO2 yet travelling no distance. This means that an idle, efficient ship may have a worse score than an older, less efficient, but highly utilised ship. VLCC owners have to tackle a difficult trade-off between CII ratings and commercial performance. CII-negative voyages may represent commercial benefits, while CII-specific contractual clauses may be considered negotiable by charterers.

CII concerns add a new dynamic to data analysis. Shipowners now need to consider their vessel’s potential voyage impact on CII ratings alongside, regional pricing, and supply and demand side market trends in actionable analysis. Whilst this entered into force from 1 January 2023, CII scores will not be published next to vessels until January 2024. At the same time, those scores will be out of date for 364 days every year and will only reflect an average up until the end of the last reporting period. This lack of data means that vessels with falling ratings will not see that reflected in their score for some time, while vessels with improving ratings will not have that reflected in their grade until the start of the next calendar year. These inconsistencies limit CII’s usefulness for charterers as an indication of the efficiency of a vessel.

Shipowners and operators are forced to find the right balance between some lucrative CII-negative fixtures and CII-positive voyages, and between cash flow and efficiency technologies. This can create a trade-off between CII scores and short-term profitability for any ship. Shipowners must understand how to operate and trade their ships to tackle this anomaly and achieve a good CII rating; ensuring that they incorporate these requirements into charter party agreements. They must adaptively manage their vessels speeds and idle days throughout the year, ensuring that vessels average a passing grade whilst maximising profits. This adds another layer of complexity for shipowners. CII represents another stream of data that must be analysed and converted into insights and actions.


Pool participation

The volume of ships in a pool allows shipowners and operators to benefit from greater economies of scale, financial robustness and flexibility through greater utilisation across their fleets, helping them to mitigate any impact on CII ratings.

Pool partners can take profitable CII-negative fixtures while maintaining ratings across the fleet by spreading those voyages across the pool based on CII scores to date. By doing so, the collective pool of ships can maximise earnings while the pain of CII-negative voyages is minimised for any individual vessel.

The pool simplifies a shipowner’s role, providing regular cash flow based on their vessel’s earning potential in the current market conditions and reducing the need for operational staff. Shipowners can allocate this resource elsewhere, including evaluating and implementing low or no-carbon technology across their fleet.

Another issue is that cash flow can effectively bar small or cash-poor shipowners outside of a pool from longer routes, which are often the most profitable. This is because the shipowner must pay for bunkers before they receive freight payment from a charterer. These routes are inherently CII-positive, as they maximise constant-speed travel and minimise time at anchor. This challenge is something that Tankers International is acutely aware of and can compensate for with the size and structure of its pool.

Tankers International has included indicative voyage CII scores in its Tankers International VLCC Fixture app, showing an estimated letter grade rating and comprehensive calculation for every VLCC voyage fixed.


Published in Tanker Operator in May 2023: LINK

Good news for shipowners as VLCC Inter-Atlantic trade remains strong

It’s clear that trading patterns for VLCCs have changed significantly over the last 12 months. European oil markets have seen a clear shift away from Russian crude since the start of the Russia-Ukraine conflict.

Official sanctions by the EU on Russian crude in place today mean that we now see virtually no Russian crude flowing into Europe and other Western economies. In June 2022, the EU Council adopted a sixth package of sanctions that, amongst others, prohibited the purchase, import or transfer of seaborne crude oil and certain petroleum products from Russia into the EU. The restrictions applied from 5 December 2022 for crude oil and from 5 February 2023 for refined petroleum products.

Europe has therefore had to find alternative crude supplies from other sources. We have seen Europe increase its imports from the Middle East, as well as Atlantic based oil suppliers including West Africa, the US and South America.

Smaller tankers have traditionally serviced the routes from these Atlantic basin suppliers to Europe, but in 2022 we saw a marked increase in the use of VLCCs. There were 28 VLCC loadings destined for Europe in August alone. This compares to just 1-4 monthly liftings prior to restrictions on Russian barrels.

Several market factors have aided this development. Firstly, we have simply seen more seaborne oil imports into Europe as Russia’s pipeline network and short haul shuttle shipments were no longer an option.

While the smaller tanker segments – Suezmax and Aframax – saw freight rate spikes in the immediate aftermath of the war breaking out, the VLCC segment had no direct links to Russia, so the freight environment for this group of ships remained flat and relatively low. This relatively weak VLCC freight market allowed VLCCs to compete with the smaller segments on the inter-Atlantic routes that in the past they had zero involvement in.

From the second quarter of 2022 onwards, we saw a sharp rise in inter-Atlantic VLCC liftings, and this elevated level of activity has persisted since. Our proprietary fixture app data does show a short-lived dip in VLCC activity in September and October last year. This was partly due to a drop in crude flows into Europe, according to data from Kpler. This was also the time when the VLCC freight market began its strong recovery, and we saw a proportional increase in the use of smaller tankers compared to the record month of August for the VLCC segment.

Since then, it appears that the inter-Atlantic trade routes have found a new balance and that they are here to stay. The use of VLCC tonnage has increased to 21-23 liftings per month over the last four months.

This trend is a positive development for shipowners. It allows vessel owners to keep their ships in short-haul business in a relatively high market and to be able to load another cargo while freight is high. This can be more lucrative than locking the vessel in on a long-haul trade and risking that the market may have fallen by the time of the next load.

This dynamic creates more volatility in the market with uncertainties around discharge times and with more frequent port operations that shorter voyages inherently carry. The result is the port to sailing time ratio goes up. This new dynamic also allows for increasingly creative trade combinations, and by triangulating a vessel, a shipowner can maximise their earnings compared to a standard Middle East to China trade route, which carries an equal amount of laden to ballast days.

On 25 February 2023 the EU adopted its 10th package of sanctions against Russia and is expected to announce more new sanctions in the coming weeks. We continue to monitor the situation, but we expect the current VLCC market conditions to persist throughout 2023, and beyond.

Tankers International targets further expansion plans under leadership of newly appointed CEO Charlie Grey

The world’s leading VLCC pool continues to grow its fleet with 20 new additions since the beginning of 2022.

London, 27th April 2023 –  The leading large crude tanker pool, Tankers International, today announced the appointment of Charlie Grey as Chief Executive Officer, replacing CEO Jonathan Lee, who will become Chairman of the board of directors. Grey, who will move from his current role as Chief Operating Officer, will lead the independent organisation through its current phase of growth. Matt Smith will take up the role of COO and will continue to focus on developing voyage optimisation schemes to reduce emissions and improve performance.

Grey officially began his CEO tenure on 3 April and has played a pivotal role to date, alongside the existing board, in expanding Tankers International’s pool of Very Large Crude Carriers (VLCCs). The pool holds 64 vessels today, including an expansion of its specialist scrubber pool from 17 to 34 vessels compared to the start of 2022.

Ensuring a young average vessel age in the pool will be crucial as shipping rides the macro-economic waves, so Tankers International has replaced old and less efficient vessels with modern and energy friendly tonnage. The average age of the pool today is younger than it was at the start of 2022.

Pools have a critical role to play in the safe and transparent transportation of crude across the globe. This is especially true in a highly fragmented VLCC sector. Facing the twin challenges of the energy transition and increasing environmental regulation – shipping pools can allow smaller owners to collaborate more effectively and deliver a more efficient tanker market for all participants.

Tankers International was established in 2000 by a visionary group of tanker owners comprising, amongst others, Euronav NV and International Seaways, inc. VLCC owners who join pools amidst volatile market conditions benefit from improved cashflow and revenues thanks to proven economies of scale, access to a wider customer base, increased financial performance, fairer charter party terms, access to market intelligence and an independent and transparent management service.

The pool has vastly improved in recent years, with its unique revenue sharing methodology and its strength in scale, data, and expertise helping to drive exceptional revenues for participants. Recent developments include the establishment of a new optional climate compensation voyage programme and the continued development of the widely used Tankers International VLCC fixture app.

Charlie Grey, CEO of Tankers International, commented: “I want to thank Jonathan for the fantastic work he’s delivered over the past 10 years, which has ensured that Tankers International has maintained and grown its market-leading position. I am honoured to be able to take the organisation forward, delivering value to the pool partners, expanding our fleet, and continuing to deliver our data-led, analysis-based approach with a human touch; a formula that has served us – and our pool partners – so well.”

Lois K. Zabrocky, International Seaways Inc.’s President and CEO, commented: “Since he was appointed as COO, Charlie excelled at meeting the needs of pool partners while navigating the uncertain trends driving the VLCC market. I am personally confident that Charlie is the right person to build on Jonathan’s great work to position Tankers International for the future.”

“As a founding member over 23 years ago, we have sought the best stewardship for the leading VLCC pool,” Hugo De Stoop, CEO of Euronav NV, added. “I am confident that under his leadership, along with the support of the management team, Charlie can deliver exceptional value and competitive financial returns for all pool partners.”

Jonathan Lee, outgoing CEO of Tankers International, added: “I believe that we have built something incredible at Tankers International, and I’m very proud to have played my part in building an evolutionary new model for tanker pooling, uniquely positioned to tackle the challenges and maximise the opportunities facing VLCC owners and operators. Since Charlie joined, it has been clear to me that he is the optimal choice to lead Tankers International as it continues to grow and evolve; I look forward to supporting him.”

A numbers game

VLCC owners are being forced to tackle a difficult trade-off between CII grades and commercial performance, but Matthew Smith of Tankers International explains how pooling can help overcome these challenges.

The recently introduced current Carbon Intensity Indicator (CII) regulations have several well-documented flaws. Industry experts have noted that the temptation to game the rules by increasing mileage on ballast legs to comply with CII regulations could be too much. In fact, many real-world scenarios exist in which abiding by the CII gradings will do more damage than good with increasing emissions to order to comply with the regulation.

CII scores remain somewhat shrouded in mystery, calculated using a complex system of measuring bunker fuel consumed as a function of distance travelled and hours underway, with this figure multiplied by a vessel-type specific factor. Some suggest that to secure the best CII rating, vessel owners could slow steam non-stop in ballast condition, which risks gaming the CII rating while emitting more emissions.

Although installing low-carbon technologies like air lubrication, engine efficiency technologies, voyage optimisation, and rotor sails will make a passing grade easier to attain, certain anomalies in the regulation mean that a highly efficient vessel will not necessarily have a good rating. For example, if that vessel sits at anchor for several days, it will require bunker fuel to power its generators, emitting CO2 yet travelling no distance. This inconsistency can result in a lower CII grade than an older, less efficient, but highly utilised ship.

Let us not forget the potential struggle as shipowners and charter counterparties play tit for tat. BIMCO’s CII operations clause is attempting to strike the right balance but it is certainly alienating segments of the industry. A group of 23 companies have formally written to BIMCO to voice their concerns. The signatories, which include Mediterranean Shipping Company and A.P. Moller – Maersk, are critical of the clause because it obliges charterers to be fully responsible for the CII performance of the ships they charter. In contrast to actually tackling emissions, shipowners must meet an agreed gCO₂/dwt per nautical mile, as charterers are reluctant to sign away precious freedoms.


The dilemma for shipowners

Regardless of industry concerns, the CII regulations as currently written came into force on the 1st of January, so shipowners must accept this. So, in the race to decarbonise, shipowners now face a tough trade off between CII grades and commercial rewards.

Shipowners must understand exactly how to operate their fleet to achieve a good CII rating; ensuring charterparty agreements incorporate these requirements.  They will need to find the right balance between financially lucrative but CII-negative fixtures and CII-positive voyages that may not achieve the same profits. At the same time, they may face a choice between cash flow and installing efficiency technologies. This challenge can create a trade-off between CII scores and short-term profitability.

Owners and operators with large cargo bases and long-term relationships with large-scale charterers have a distinct advantage. This relationship allows them to plan voyages ahead with more confidence – and ensure that they have a mix of different voyage types that meet appropriate standards.

The trade-offs will be more extreme for shipowners who do not have the commercial scale needed to negotiate favourable terms and maximise vessel utilisation. Limited cash flow effectively bars small or cash-poor shipowners outside of a pool from longer routes, which are often the most profitable, as the shipowner must pay for bunkers before they receive freight payment from a charterer. These routes are inherently CII-positive, as they maximise constant-speed travel and minimise time at anchor.

Charterer demand represents an enticing reward for decarbonisation. Yet, they cannot justify owners’ decisions without properly understanding their vessels and operational profile. Most tanker owners do not have sufficient flexible operational resources to complete these complex assessments and may have to build out new teams at an additional cost. Added to that, inconsistent earnings in the spot market can make it difficult for owners to plan technical retrofits profitably, as drydocks can coincide with particular cash flow droughts. Clearly, tanker owners and operators are facing a headache in meeting CII targets at a time when all focus should be on ensuring the safe delivery of their cargo.


Strength in numbers

So how can tanker owners and operators navigate CII disruption while maximising profits? Pooling offers shipowners significant advantages, protecting shipowners against the challenges and setting them up for a seamless approach to any revised or future regulations.

The pooling model provides strength in scale. A pool’s strong commercial position enables greater flexibility in charter negotiations, and the collective pool of ships can maximise earnings. At the same time, the challenge of CII-negative voyages is minimised for any individual vessel as the volume of ships in the pool allows pool members to benefit from greater economies of scale, financial robustness and flexibility through greater utilisation across the combined fleet – helping them to mitigate any impact on CII grades.

Pools can take financially profitable CII-negative fixtures while maintaining grades across the fleet by spreading those voyages across the pool based on CII scores to date. By doing so, the pain of CII-negative voyages for any individual vessel does not mean a poorer pay day as the collective pool of ships can maximise earnings.

However, not all pools are created equal and the Tankers International pool goes one step further. It simplifies a shipowner’s role, providing regular cash flow based on their vessel’s earning potential in the current market conditions. By outsourcing commercial operations to the pool, shipowners can allocate this resource elsewhere, including evaluating and implementing low or no-carbon technology across their fleet.

The Tankers International pool also benefits from high-level technical information sharing provided by in-house forums that discuss insight on important innovations and new technologies – and the challenges that they have represented.


Decisions underpinned by data

Shipowners need to consider their vessel’s potential voyage impact on CII grades alongside, regional pricing, and supply and demand side market trends in actionable analysis. This challenge adds a layer of complexity, because while the CII regulations took effect this year, shipoweners will have to wait until January 2024 to understand their score. At the same time, those scores will be out of date for 364 days every year and will only reflect an average up until the end of the last reporting period. This lack of data means that vessels with falling grades will not see that reflected in their score for some time, while vessels with improving grades will not have that reflected in their grade until the start of the next calendar year.

These inconsistencies limit CII’s usefulness, so indicative voyage CII scores are included in the Tankers International VLCC Fixture app, showing an estimated letter grade and comprehensive calculation for every VLCC voyage fixed in the spot market. The new CII reporting mechanism draws on extensive knowledge of the global VLCC fleet to benchmark any vessel’s bunker consumption against the closest similar vessel out of the 250 vessels that have traded in the Tankers International pool since 2000. This is set against a benchmark speed, which adapts based on our own data on averages across the sector and market conditions.


Strength going forward

There are legitimate questions about whether CII rules are fit for purpose. As global shipping has the potential to be involved in contradicted legal affairs, there are challenges ahead with the dramatic regulatory change stemming from CII, demanding a difference in how the sector needs to work together. The status quo is not viable, and tanker owners and operators need to explore new solutions to ensure that they meet CII targets, and pools are a clear example of how tanker owners can strike a balance between compliance and profitability.


Published in Bunkerspot in April 2023: 

Tankers International launches CII update for popular VLCC fixture app

Our Head of Research & Insight, Mette Frederiksen, takes us through the development process behind the latest update to our popular VLCC app that provides an indicative CII rating and score for every voyage fixture based on Tankers International’s world-leading VLCC market data.

The volume of data that we all work with on a daily basis, coupled with the latest regulatory updates, means that it has never been more important to ensure that information is shared to enable transparency and collaboration. Therefore, introducing indicative voyage CII scores on the Tankers International VLCC Fixture app was a clear next step to supporting charterers in understanding their CII options and assisting shipowners and managers in understanding how others are – or aren’t – achieving good ship ratings.

Since the CII regulation entered into force in January 2023, there have already been some challenges with the regulation and concerns about how transparent this data will actually be. Our latest app update aims to allow shipowners, charterers, and regulators to openly see what issues they can identify using vessel CII scores and ratings. In turn, this can help to build informed policies and help regulators understand if and where reform may be needed.

The indicative CII scores are calculated based on internal speed and consumption data from vessels that have traded in our pool and dates back to 2000. This covers more than 250 VLCCs, of different ages, designs, and constructions. Where no version of a particular VLCC has previously been entered into the Tankers International VLCC Pool, the app uses the nearest possible match based on parameters including age, build yard, and engine design.

The CII feature also includes a ‘feedback’ tab for each fixture listing so that users can report any additional information or errors. This information can only be seen by the Tankers International team, and the messages sent cannot be seen on the app. Shipowners or ship managers who believe there is an error in our calculations should use this feature to report the error, and they can choose to provide a breakdown of actual representative data for the vessel.

The Tankers International app development team will verify this data before updating the vessel’s statistics, to provide the most accurate information possible.

This, alongside other data points like market demand and fixture frequency, is used by Tankers International to create an industry-wide benchmark speed. The Tankers International benchmark has been used and honed over two decades and provides incredibly accurate indicative figures for bunker consumption.

Given the ever-changing landscape of our industry and the uncertainty that these regulations have caused, it is now more critical than ever before that industry members have access to quality data, faster to support decision making for all stakeholders. This latest CII feature will allow users to integrate even more quality data and analysis into negotiations and strategic direction.  This additional layer of insight and market transparency will benefit the entire VLCC sector.