JUST as the sharp decline in tanker trade through the Suez Canal is becoming a worry to the canal authority the oil tankers that bear its name are facing an equally uncertain future. The world's Suezmax tankers, typically 130,000140,000 dwt, are so-called because they are the largest tankers that can squeeze through the canal fully laden. Originally designed to serve the Middle East they have never gained a significant market in the region and are now under threat from VLCC competition in the main Africa/Atlantic/Europe trades where they are established, according to new research*.
There is a superficial improvement in Suezmax trades, however. Cargo volumes have increased in eight out of the 10 main trade routes since 1992. Yet the Drewry report says that the Suezmax performance does not look so healthy when its performance is compared to the VLCC sector. This shows that, 'in terms of market performance over the last four years, Suezmaxes have been outperformed by VLCCs on six of the top 10 trades, which includes the four largest trades.' Suezmaxes have experienced positive developments in only three trades: Sidi Krier to OECD Europe;
Eastern Europe to OECD Europe; and Latin America to North America.
The main reason for the heightened competition is the increase in oil production from the North Sea and Latin America which has undermined growth in the Middle East long-haul trades. This has pushed the VLCCs into the Atlantic in search of business, pitting them against Suezmaxes in the expanding North Sea trades and their traditional West Africa trades.
Many Suezmaxes could be heading for scrap as 215 vessels 58 per cent of the fleet are more than 15 years of age and face fourth or fifth special surveys during the next five years. The US OPA9O regulations will steadily exclude more single hull vessels from the Atlantic region and data suggests there will be poor trading returns over the next decade for these vessels. Although the overall trade is certain to increase in volume, the extent to which the Suezmax tonnage can maintain its share of trade remains to be seen, the research suggests.
*Suezmax Tankers Myths, Facts and Surprises, Drewry Shipping Consultants, London, August 1996, £395