The cost of hauling Middle East crude oil to Asia slid for a sixth day, prompting speculation some tanker owners may consider reducing ship speeds to save on fuel costs and cut vessel supply.
Charter rates for very large crude carriers, or VLCCs, on the industry’s benchmark Saudi Arabia-to-Japan voyage fell 1.5 percent to 45.32 Worldscale points, according to the Baltic Exchange in London. Returns from the route, the world’s busiest for supertankers, dropped 11 percent to $8,111 a day.
Speed cuts and refusals to accept cargoes will become “more prevalent” next week, likely bolstering freight costs, London-based E.A. Gibson Shipbrokers Ltd. said in an e-mailed report today. Lower speeds mean tankers need more time to complete journeys, curbing the supply of vessels.
Frontline Ltd., the world’s largest operator of VLCCs, said at least three times in 2010 it was declining unprofitable charters. The company, which also cut speeds in 2009 to lower fuel costs, needs a daily return of $31,300 to break even on its supertankers.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a metric ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
The Baltic Dirty Tanker Index, a wider measure of crude-oil transportation costs, fall 1.2 percent to 719 points, according to the Baltic Exchange.
Charter rates for very large crude carriers, or VLCCs, on the industry’s benchmark Saudi Arabia-to-Japan voyage fell 1.5 percent to 45.32 Worldscale points, according to the Baltic Exchange in London. Returns from the route, the world’s busiest for supertankers, dropped 11 percent to $8,111 a day.
Speed cuts and refusals to accept cargoes will become “more prevalent” next week, likely bolstering freight costs, London-based E.A. Gibson Shipbrokers Ltd. said in an e-mailed report today. Lower speeds mean tankers need more time to complete journeys, curbing the supply of vessels.
Frontline Ltd., the world’s largest operator of VLCCs, said at least three times in 2010 it was declining unprofitable charters. The company, which also cut speeds in 2009 to lower fuel costs, needs a daily return of $31,300 to break even on its supertankers.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a metric ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
The Baltic Dirty Tanker Index, a wider measure of crude-oil transportation costs, fall 1.2 percent to 719 points, according to the Baltic Exchange.