Inefficiencies proliferate across ageing global tanker fleet

The global tanker fleet is grappling with significant inefficiencies due to its aging vessels, according to new data from broker Gibson. Over half of the fleet, consisting of tankers with a deadweight tonnage of 25,000 and above, are 15 years or older, with nearly a quarter exceeding 20 years. This deterioration in vessel condition is leading to increased downtime, impacting operational capacity and overall trading efficiency.

Aging Fleet Contributes to Reduced Utilization

Recent analysis from Gibson reveals that 51% of the global tanker fleet is aged 15 years and older, while 22% are over 20 years old. The situation is even more pronounced in the “dark fleet,” where a staggering 93% of vessels fall into the 15-year category, and 64% are over 20. Ships older than 20 years spend, on average, 17% more time anchored or moored compared to their younger counterparts. The largest disparity is seen in Very Large Crude Carriers (VLCCs), which experience a 32% increase in time spent moored or anchored.

VLCC Tonne days growth from AG to China has decreased to the lowest level since the end of 2022

Moreover, older vessels also spend significantly more time in ballast. Tankers over 20 years old spend 14% more of their operational time in this state, with Medium Range (MR) tankers showing a 22% increase. This trend illustrates a direct correlation between age and reduced tanker utilization. Gibson’s report indicates that sanctioned VLCCs over 20 years old face even more severe operational limitations, remaining moored or anchored 67% of the time and carrying cargo only 38% of the time. In contrast, unsanctioned vessels in the same age group show slightly better figures.

Mette Frederiksen, head of research at Tankers International, highlighted the rapid decline in efficiency for ships beyond 18 years of age. She noted that trading capacity diminishes by approximately 10% annually as these older vessels face stricter regulations and dwindling interest from charterers. The overall inefficiency of the aging VLCC fleet poses a significant challenge for the market.

Future Outlook for the VLCC Market

Despite an increase of over 100 ships in the total VLCC fleet over the past five years, the actual operational growth is closer to 60 vessels, as per Tankers International data. The market anticipates an additional 70 new VLCCs entering service in the next three years, which may seem promising with an 8% nominal capacity increase. However, due to the declining utilization rates of older vessels, the effective growth in supply is projected to be a mere 1%.

This stark contrast between nominal and effective capacity highlights the pressing challenges facing the tanker industry. As the fleet ages, the operational capabilities of older ships continue to diminish, exacerbating inefficiencies in a market that is already under strain. The industry must adapt to these changes and consider strategies to improve the operational viability of their aging fleet while preparing for the influx of new vessels in the coming years.