Lower earnings for tankers that carry energy products are sparking concern about possible cuts in spending on maintenance and crews, according to an industry group representing companies including BP Plc, Bloomberg reports. “We’re beginning to see the start of a trend,” David Cotterell, director of the London-based Oil Companies International Marine Forum, said by phone today. Four “serious” tanker fires took place in the first quarter, resulting in the loss of 15 lives, he said separately by e-mail.
“It’s a big concern and something that we’ll continue to watch very closely,” Cotterell said. “We’ve seen from previous downturns that one of the things that happens quickly is the need to reduce costs on vessels. One of the ways to reduce costs on vessels is crews and also on maintenance.”
Rates for the largest oil tankers fell to the lowest level in 14 years in 2011 amid a glut of vessels and slowing global crude demand. Earnings for five types of oil-product and crude tankers on 16 routes were below break-even levels on average in the last year, data from shipbroker Poten & Partners Inc. and investment bank Pareto Securities ASA show.
Forum members transport 95 percent of all oil carried by sea, according to Cotterell. The group’s membership includes the shipping arms of BP and Royal Dutch Shell Plc, the world’s two biggest charterers of tankers, its website shows.
Reduced returns over the past two years are affecting maintenance, Craig Stevenson Jr., chief executive officer of Diamond S Shipping, said in an interview March 22. The poor condition of some vessels offered for distressed sale by banks was evident in potential purchases assessed by the Greenwich, Connecticut-based owner of 40 tankers, he said.
“There’s been a good two years of really poor economic environment in shipping,” Stevenson said. “What do you think happens to maintenance? It stops.”
“It’s a big concern and something that we’ll continue to watch very closely,” Cotterell said. “We’ve seen from previous downturns that one of the things that happens quickly is the need to reduce costs on vessels. One of the ways to reduce costs on vessels is crews and also on maintenance.”
Rates for the largest oil tankers fell to the lowest level in 14 years in 2011 amid a glut of vessels and slowing global crude demand. Earnings for five types of oil-product and crude tankers on 16 routes were below break-even levels on average in the last year, data from shipbroker Poten & Partners Inc. and investment bank Pareto Securities ASA show.
Forum members transport 95 percent of all oil carried by sea, according to Cotterell. The group’s membership includes the shipping arms of BP and Royal Dutch Shell Plc, the world’s two biggest charterers of tankers, its website shows.
Reduced returns over the past two years are affecting maintenance, Craig Stevenson Jr., chief executive officer of Diamond S Shipping, said in an interview March 22. The poor condition of some vessels offered for distressed sale by banks was evident in potential purchases assessed by the Greenwich, Connecticut-based owner of 40 tankers, he said.
“There’s been a good two years of really poor economic environment in shipping,” Stevenson said. “What do you think happens to maintenance? It stops.”