Weight of Freight: Rising role on Insurance in maritime
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Key topics covered in the podcast:
- Rising tensions in the Red Sea prompted LR tanker freight rates to spike in early January
- How are rates faring now, and how is insurance moulding freight in the region?
- Impact of Cargo Insurance market
- How ‘The Polar” case ruling limits shipowner’s right to refuse Red Sea voyages
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Alabama lock expected to reopen late April
Alabama lock expected to reopen late April
Houston, 18 December (Argus) — The main chamber of the Wilson Lock in Alabama along the Tennessee River is tentatively scheduled to reopen in four months, according to the US Army Corps of Engineers (Corps). The Corps expects to finish phase two of dewatering repairs on the lock on 20 April, after which navigation can resume through the main chamber of the lock. The timeline for reopening may shift depending on final assessments, the Corps said. Delays at the lock average around 12 days through the auxiliary chamber, according to the Lock Status Report by the Corps. Delays at the lock should wane during year-end holidays but pick up as spring approaches, barge carriers said. The main chamber of the Wilson Lock will have been closed for nearly seven months by the April reopening after closing on 25 September . By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Viewpoint: European tanker rates meander into 2025
Viewpoint: European tanker rates meander into 2025
London, 18 December (Argus) — European Medium Range (MR) and Handysize tanker rates are set to remain subdued in 2025 as a continued shortfall in US gasoline demand and west Africa's growing independence from imports leaves MRs with little to do. Europe has become increasingly able to survive on domestic gasoline production in 2024, because of modest economic growth and frequent refinery maintenance procedures. This has kept prices high and made gasoline less competitive in export markets, which could be set to continue in 2025, potentially keeping exports in line with 2024. European gasoline exports on MRs to the US in 2024 dropped to the lowest since 2020. The average in the January-November period was just 206,000 b/d, down from 226,000 b/d in all of 2023 and almost as low as 193,000 b/d in 2020 during the Covid-19 pandemic. Exports in 2025 will probably remain close to 2024. This drop pushed MR rates to the lowest since 2021, although they have not yet moved back to the levels that were standard before the Russia-Ukraine war and associated sanctions, which led to sweeping changes in the tanker market in 2021. The 2024-average rate between the UK Continent and US Atlantic coast was $26.67/t, down from $32.63/t in 2023 and $37.94/t in 2021. But this was still significantly above the 2019 level of $19.30/t. The time charter equivalent (TCE) rate — a measure of the money a shipowner generates after fuel and other costs — on the route was around $13,250/t in 2024, which was above shipowners' typical operating cost of $5,000-7,000/d. Rates in 2025 seem likely to hew closely to 2024 levels as gasoline fundamentals in Europe and the US serve to limit the transatlantic trade. In Europe, a high amount of planned and unplanned refinery maintenance and domestic consumption served to keep European gasoline prices comparatively high and limited US demand. At the same time, US production of gasoline increased, making it less reliant on imports. This has been particularly apparent in the fourth quarter of 2024 when European gasoline exports hit a 52 month low and 2025 will probably see the same pattern. In west Africa, the second key MR market, the 650,000 b/d capacity Dangote refinery in Nigeria is now producing gasoil and gasoline, which led to a decline in spot MR demand from Europe. Dangote is yet to operate at full capacity but continues to ramp up and west Africa will become increasingly able to cover demand with domestically-produced clean products. This will mean the MR market in 2025 will be focused almost exclusively on the slowing Europe to US route, which will keep rates under significant pressure. Diesel doldrums depress LR2s Long Range 2 (LR2)-sized diesel/gasoil rates into Europe should have hit a peak in 2024 as tankers had to divert around the Cape of Good Hope to avoid attacks from Yemen-based Houthis in the Red Sea, and the Mideast Gulf remained Europe's primary diesel supplier. But instead the market slumped and this trend seems set to continue in 2025. The fourth quarter in particular has been lacklustre with rates half of what they were at the same point in 2023. European diesel imports are particularly subject to east Asian naphtha demand, as both trades compete for tankers in the Mideast Gulf. East Asian naphtha demand has been slow and is set to remain so in 2025 as downstream margins have weakened far enough that many of the region's refineries have shuttered operations temporarily. At the same time, several very large crude carrier (VLCC)-sized diesel shipments on the route in August boosted European inventories and stunted demand through the third and fourth quarters. European importers switch to US MR-sized diesel cargoes when LR2 freight rates rise, which will again create a ceiling for LR2 rates in 2025. By Erika Tsirikou Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Alabama lock to remain closed until spring
Alabama lock to remain closed until spring
Houston, 17 December (Argus) — The US Army Corps of Engineers (Corps) has determined that the main chamber of the Wilson Lock on the Tennessee River near Florence, Alabama, will remain closed until spring 2025 as repairs continue. The Wilson Lock, the first lock on the Tennessee River, closed on 25 September after cracks in the lock gates on both the land and river sides were discovered. The main lock was closed to prevent further damage in the main chamber, although the auxiliary chamber was kept open for navigation. The Corps had been eyeing an earlier opening date for the main chamber since the start of November. Although months of repairs have taken place, the Corps resolved to keep the main chamber closed to preserve the lock and maintain personnel safety. The Corps, in partnership with the Tennessee Valley Authority (TVA), is still assessing the root cause of the cracking. A second de-watering of the gate is scheduled for the first three months of 2025 to repairs. No official date has been set for the lock reopening, although some barge carriers have heard of a late April opening date. A regular 15 barge tow has endured 5-6 days of delay through the lock on average, according to carriers. The Corps' Lock Status Report on the Wilson Lock reported a nearly two-week delay for tows navigating through the lock. This has been costly for shippers by forcing them to pay delay fees. Wilson Lock is the second lock in Alabama to undergo a lengthy closure this year. Most lock and dams along the US river system are over 70 years old, likely resulting in more closures in the coming year. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Viewpoint: Lower demand to weigh on VLCC market
Viewpoint: Lower demand to weigh on VLCC market
London, 17 December (Argus) — The VLCC tanker market is facing downside risk moving into 2025 — after a lacklustre fourth quarter of 2024 — as a result of shrinking Chinese demand and the continuation of the Opec+ crude production cuts. Opec+ has delayed the unwinding of 2.2mn b/d cut once again to April 2025, and this may be pushed further as it "can be paused or reversed subject to market conditions". This would contribute to keep crude tanker demand and rates under pressure in 2025, especially as the Opec+ group will also keep in place two other sets of cuts by an additional year to the end of 2026 . VLCC rates in 2024 have also been under significant pressure in the second half of the year because of a slowdown in Chinese oil demand. China is the key destination for VLCCs. It accounted for nearly 40pc of all VLCC voyages in 2024, with Japan and South Korea accounting for another 20pc. The IEA has kept its oil demand growth for China unchanged at 150,000 b/d for 2024. This is far below the 710,000 b/d it was forecasting in January 2024. And this trend is likely to continue in 2025, being partly the result of an increased uptake of electric vehicles, LNG-powered trucks and high-speed rail, according to the IEA. China has also cut export tax rebates on oil products to 9pc from the current 13pc, effective 1 December. This may lead to a decrease in Chinese oil product exports, as players may be discouraged by the VAT rebate cuts and reduce Chinese crude imports, weighing on tanker demand. VLCC rates will receive little support from the newbuild market this year. Tankers deliveries in 2025 are scheduled to be lower, with a 1.2pc increase in overall tanker fleet growth, but ship scrapping rates are slowing down. This should keep tanker availability more or less steady in 2025, but rates could come under pressure from an ageing fleet. The average age of a tanker is now 13.2 years. This increase in vessel ages may lead to further rate discounts — which are typically attached to older tankers. The re-election of Donald Trump as US president could have some impacts on the freight markets heading into 2025, but it is unlikely to offer support to the VLCC segment. Trump has planned to ramp up the US's crude production over the course of his second term. This has brought some market participants to question the extent of the increases and the knock on effects. The US primarily uses Aframaxes and Suezmaxes for crude exports and if the new government's policies lead to an increase in crude exports then the volumes would most likely be carried on tankers in these segments. The US also typically exports more to Europe than to Asia-Pacific, which would also mean a proportional increase in the smaller vessel classes rather than VLCCs. The VLCC market will most likely remain under pressure, particularly early in 2025. And some VLCC shipowners have already started to widen their market scope onto traditionally Suezmax routes from west Africa to Europe to increase earnings. But having VLCCs competing with smaller classes could lead to a more sustained slump in other segments, as it would increase tanker supply on these routes and ultimately weigh on rates. This is because increased competitions for cargoes could lead owners to reduce offers in order to secure work. By Rhys van Dinther Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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