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Korean and Chinese tanker interests drawn to Singapore

Fri 24 Feb 2017 by Barry Luthwaite

Korean and Chinese tanker interests drawn to Singapore

Singapore is drawing new tanker business. The Singaporean-flagged tanker fleet is one of the world’s youngest

Chinese tanker management interests prefer to establish management operations in Singapore, rather than mainland China and Hong Kong, which are both experiencing economic slowdowns. They are being supported in this by the Singaporean government which is easing some of the associated costs of setting up shop on the Lion Republic.

Having started operations in coastal trade, Sinochem now has a great ambition to be a major player in global chemical trades. A new commercial and technical base has recently been established in Singapore to capture more market share in Asian regional and Middle East to Far East trades. Sinochem established a joint venture in 2005 with Stolt-Nielsen on a 51 per cent majority shareholding basis. Where coastal operations in China by either is not affected, they are now in competition on some trading routes. Sinochem is in the middle of a huge newbuilding programme, which concentrates on parcel tankers and contract of affreightment business. Much of the latter is brokered through Singapore. The latest units are among the biggest built, offering 28 compartment tanks.

In a further boost, a global hub office has been established for the Korean marine and shipbuilding industry to reach connecting markets and develop new business opportunities. South Korea seeks Singapore’s experience in marketing and globalisation. Five Korean companies have set up home, but office space is expected to cover 50 businesses by 2020. Each side will develop its co-operative strengths and work on its weaknesses. 

The leading trading owners are largely unchanged in unit terms, with Ocean Tankers leading the way with a complement of 80 ships. But the big mover is Navig8, which is in second place with 60 ships. Navig8 will soon become the largest owner, and is easily in the leading position if you add pool vessels. Malaysian-owned, Singapore-based AET is third with 57 ships. Raffles Shipmanagement Services, a division of commodities trader Wilmar Holdings, recently ended a newbuilding programme. The company has looked at more penetration locally, and has concluded a newbuilding programme for six 19,700 dwt chemical carriers that will deliver from Jinhai, China, in 2018 and 2019. All six will trade in inter-island transport in South East Asia, which indicates that they may be parcel carriers. The rise of Raffles Shipmanagement has lifted it to fourth place, with control of 44 units.

As at the end of January the directly-owned Singapore trading fleet numbered 787 vessels, totalling 43,178,055 dwt. This is an increase over the previous annual complement of 743 units totalling 41,950,438 dwt. More overseas owners are employing the Singapore registry which has 685 tankers under its flag. Many of these owners have a maritime infrastructure presence on the island, but not beneficial owner domicile.

With 91 vessels on order (aggregating 5,112,983 dwt) Singapore owners rank fourth in the newbuilding league. Of the 91 vessels on order, 34 are for the products trades.

The last 12 months have seen orders for 37 tankers placed. This will add 1,816,900 dwt to the fleet by 2018. This contrasts with 58 deliveries in the last year, commissioning 3,888,948 dwt. A few of the newbuildings were sold off in asset play. Others will be leased and bareboat chartered with compulsory purchases exercised in due course, as shipowners and shipyards sometimes struggle to raise finance in a tight lending climate.

With one of the youngest trading fleets, demolition sales are limited. Only two units went for recycling. Secondhand acquisitions amounted to 14 incoming units, whereas twice this many were sold to trading buyers exploiting rising values and asset play.

As the global leader in bunkering infrastructure, Singapore operates the world’s biggest bunkering port and bunker tanker fleet. Of its 144 bunker tankers, 135 have mass flow metering (MFM) installed in line with the 1 January 2017 target set by the Maritime and Port Authority of Singapore. The key advantage of MFM is that the flow rate in the pipe can gauge the quantity as well as mass and density of the bunker fuel oil passing through. The typical bunkering operation can be reduced from eight to four hours. Some barges have not complied, and will be banned from supplying fuel oil. MFMs will also apply by mandate later this year for supply of marine gas oil. Singapore intends to digitalise all bunkering paperwork over the next few years.

Competition from overseas owners is increasing. China, in particular, is stepping up efforts to position vessels in the Malacca Strait. The changing conditions in oil supply (due to environmental considerations and mandatory lowering of sulphur oil content to 0.5 per cent by 2020) are proving a headache for compliance by the global fleet. Although the bunkering fleet is large to cater to the world’s largest port, the target is a daunting one. With cargo volumes down, there has been far less demand for bunker fuel and this is hitting some owners and traders hard. Many units in the bunkering fleet are ageing and seen as prime candidates for recycling, while larger units are acquired with double the capacity. LNG bunkering is still making little headway, though this is a global phenomenon.

TANKERS DELIVERED 2016 TO DATE    
     
Singapore owners    
     
Vessel type no dwt
Aframax crude 21 1,991,465
Handymax 20 921,827
Handysize 10 242,554
Medium tanker 1 16,717
Panamax 1 73,800
Small tanker 1 9,663
Suezmax 2 315,562
VLCC 2 317,360
Total 58 3,888,948

 



Sources for all tables on this page: BRL Shipping Consultants Data as at 2 February 2017


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