John Fredriksen, the billionaire chairman of the world’s biggest operator of supertankers, said there “won’t be much money to earn” in shipping in the next two to three years. Daily rates for supertankers carrying Saudi Arabian oil to Japan, the industry’s benchmark route , fell to $9,958 yesterday, down from as high as $88,345 in January, according to the Baltic Exchange in London. The global fleet of the ships, known as very large crude carriers, will expand 4.9 percent this year, more than the anticipated gain in demand of 3.9 percent, according to Clarkson Plc, the world’s biggest shipbroker.
“I’m negative to shipping, I’ve been that for a while,” Fredriksen, head of Frontline Ltd., told reporters at a Pareto Securities ASA conference in Oslo today. “Tanker rates, I don’t have much belief in.”
Shipping lines ordered the largest number of supertankers since the 1970s in the last several years as the fleet failed to keep pace with global oil demand that expanded for 14 consecutive years through 2007. Rates slumped from $177,000 in July 2008 amid the worst financial crisis since the Great Depression. Crude consumption last year fell the most in more than a quarter century, according to BP Plc.
Frontline warned on Aug. 27 that its earnings this quarter would be “materially lower” than in the prior three months. The company is rejecting cargoes on the benchmark route because the trade is no longer profitable, Jens Martin Jensen, chief executive officer of Frontline’s management unit, said Aug. 23. VLCCs need $11,601 to pay crew, repairs and other running costs, according to London-based Drewry Shipping Consultants Ltd.
Oil Rigs
Hemen Holding Ltd., indirectly controlled by trusts created by Fredriksen for his family, owns 33.8 percent of Frontline, according to a Feb. 28 filing to the Securities and Exchange Commission. Hemen Holding also has stakes in companies including Seadrill Ltd., an oil-rig firm, and Golden Ocean Group Ltd., a shipper of dry bulk commodities such as iron ore and coal.
While rates may be declining, Frontline “is in good shape,” Fredriksen said. “For the most part we have secured against most of the downside both in dry bulk and tankers.”
Frontline declined 2.9 kroner, or 1.7 percent, to 164.8 kroner as of 11:57 a.m. in Oslo, valuing the company at 12.8 billion kroner ($2.1 billion). The shares gained 1.7 percent this year, better than the 10 percent slump in the six-member Bloomberg Tanker Index.
“I’m negative to shipping, I’ve been that for a while,” Fredriksen, head of Frontline Ltd., told reporters at a Pareto Securities ASA conference in Oslo today. “Tanker rates, I don’t have much belief in.”
Shipping lines ordered the largest number of supertankers since the 1970s in the last several years as the fleet failed to keep pace with global oil demand that expanded for 14 consecutive years through 2007. Rates slumped from $177,000 in July 2008 amid the worst financial crisis since the Great Depression. Crude consumption last year fell the most in more than a quarter century, according to BP Plc.
Frontline warned on Aug. 27 that its earnings this quarter would be “materially lower” than in the prior three months. The company is rejecting cargoes on the benchmark route because the trade is no longer profitable, Jens Martin Jensen, chief executive officer of Frontline’s management unit, said Aug. 23. VLCCs need $11,601 to pay crew, repairs and other running costs, according to London-based Drewry Shipping Consultants Ltd.
Oil Rigs
Hemen Holding Ltd., indirectly controlled by trusts created by Fredriksen for his family, owns 33.8 percent of Frontline, according to a Feb. 28 filing to the Securities and Exchange Commission. Hemen Holding also has stakes in companies including Seadrill Ltd., an oil-rig firm, and Golden Ocean Group Ltd., a shipper of dry bulk commodities such as iron ore and coal.
While rates may be declining, Frontline “is in good shape,” Fredriksen said. “For the most part we have secured against most of the downside both in dry bulk and tankers.”
Frontline declined 2.9 kroner, or 1.7 percent, to 164.8 kroner as of 11:57 a.m. in Oslo, valuing the company at 12.8 billion kroner ($2.1 billion). The shares gained 1.7 percent this year, better than the 10 percent slump in the six-member Bloomberg Tanker Index.