The global tanker fleet may be unable to effectively keep pace with demand in the coming years as few new oil tankers are being built while crude demand is expected to rise, according to a panel of shipowners at the Marine Money convention in New York.
The construction of commercial vessels takes years to complete, and most shipyards around the world are booked well into the late 2020's building containerships ordered during the height of the Covid-19 pandemic, when port congestion combined with a rise in consumer purchasing to skyrocket container freight rates.
"We're looking at a low orderbook stretching into 2028 through 2029, and by 2031 by normal metrics, we need a lot of replacement in tankers," shipowner Frontline's chief executive Lars Barstad said. "Unless we can gradually reduce oil consumption, we have a structural problem here."
The Covid-19 lockdowns also contributed to a drop in operational shipyards in countries like South Korea in the post-pandemic landscape.
"We don't have half the building capacity we had in 2011," Barstad said.
Asked by moderator Omar Nokta from research firm Jefferies if any meaningful amount of capacity was set to come online from shipyards looking to capitalize on the high price of newbuilds, all the shipowners on the panel responded with an emphatic "no".
The aging global tanker fleet will struggle to meet demand if newbuilds remain low, shipowner Hafnia chief executive Mikael Skov said.
"We still see [oil] growth ahead of us," Skov said. "My biggest worry is we're going to run out of tankers too soon."
Slow fleet replenishment amid limited shipyard availability and high costs is being compounded by indecision among shipowners on what kind of vessels to purchase. Concerns of building up a fleet centered on one of the potential next-generation propulsion fuels, like ammonia, and winding up with a stranded asset once another fuel becomes the new industry standard is keeping many shipowners wary of investing too early, even as the time available to receive delivery of a newbuild within this decade begins to wind down.
"Unfortunately, at least for the next generation of ships, the fuel of the future is probably fuel oil," shipowner Ardmore chief executive Anthony Gurnee said. "There are technological issues with ammonia. We have to be realistic about that."
"What we think is very actionable today is both technical and operational fuel efficiency utilizing conventional fuel with some kind of a dual fuel component," Gurnee said.
