In International Shipping News 27/04/2017
Denmark-based Hafnia Management plans to significantly expand its global footprint by adding more Long Range II tankers into its pool and also have an increased presence in the Medium Range tankers segment in the Asian region, a senior company official said.
Hafnia is one of the founders of the Singapore-based Straits Tankers’ LR Pool, in which it has an ownership of 50% and the remaining half is with Mitsui OSK Lines. Hafnia also operates product tanker pools for Handy and MR segments.
“There is more that could come into the [LR2] sector,” Mikael Skov, CEO Hafnia Tankers, told S&P Global Platts in an interview, on the sidelines of the Sea Asia Conference in Singapore.
Straits’ entry into the LR2 market is significant because it is already the largest pool in the LR1 segment, with close to 50 ships plying both East and the West of Suez, with an everage age of around eight years.
“Straits already has so many LR1s and we feel there is a lot of similarity between LR1s and LR2s, so it makes sense to operate them together,” Skov said.
There is also a lot of freight correlation between Handysize, MR, and LR1 and LR2 tankers, and therefore to have ships of each size helps provide a bigger choice to the customers, he said.
The Mitsui OSK Lines Ltd.-controlled Phoenix Dream is the first LR2 tanker to be admitted into Straits’ pool. Mitsubishi Chemical Corp. also has around 20% ownership in this ship, sources said.
Skov said that around 25 ships have been added to the company’s pools in the last 12 months.
“The constant focus of our strategy is to have a critical mass and the optimization of scale,” he noted.
MEDIUM RANGE FLEET EXPANSION
Skov said Hafnia also has plans to expand its fleet in the MR segment both in terms of the numbers and the geographical footprint. Currently, most of their MRs are operating in the Western Hemispehere.
“We have a very strong ambition to grow the MR pool globally,” Skov said. “The global trading patterns for cargoes is complex, traders are looking at arbitrage opportunities for their voyages and to satisfy their needs, Hafnia wants to give them the optionality to send ships globally.”
“We are trying to achieve this by employing more vessels in the pool,” he said. This will also provide the economies of scale and enable the pools to maintain a low cost structure.
Hafnia’s tanker pools have a combined fleet of around 105 LRs, MRs and Handysize tankers. The three pools have grown by 31%, 22% and 118%, respectively, since 2015, according to the company data.
The average utilization of the pool ships is over 95%, which implies that the number of idle days for them is very low and improves returns.
Skov claimed that unlike many other pools, Hafnia and Straits charge for their services from pool-members on a net-revenue basis, after the expenses have been accounted for, instead of on the gross basis.
Such a structure potentially serves as an incentive for a pool to minimise costs such as bunkers, he said.
Tanker pools usually charge a commission on gross revenues and a daily administration fee for each ship. After deducting all expenses, the net earnings are distributed on a regular basis to vessel owners or pool members. The earnings vary, based on evaluation of the ship and its earning capacity, and is under a pre-agreed “pool points” weighting system. Each vessel receives its proportionate share of revenues. The detailed revenue-sharing formulae differ from pool to pool.
GLOBAL SUPPLY OVERHANG
“The demand in the product tankers’ sector has been strong but it is also a fact that an excessive supply of ships are coming into the market,” Skov said.
This year is expected to be a “mediocre year” from the owners’ earnings prespective but on the positive side, it may be the last in the near term to see a substantial number of deliveries of new buildings, he said.
There has not been a massive ordering of ships in the last 12-18 months and as a result the deliveries in the 2018-2020 period will not be massive either.
“A major part of the newbuildings are now being abosorbed into the the global fleet. It is the last year of the big inflow of ships, with no massive new speculative building orders” he noted.
The overall shipyard capacity has also reduced, with no new large shipyards being set up to build product tankers.
“There are only a limited number of shipyards that can build product tankers, mostly in South Korea, Japan and China, and to some extent in Vietnam,” he added.
At the beginning of this year, the world’s total order book for LR1s was at around 46, of which around 31 were projected to be delivered in 2017, according to the estimates of Banchero Costa, an Italian brokerage and consultancy. The corresponding numbers for the LR2s was 64 and 51, the estimates showed.
Source: Platts
