Fleet Growth Still a Burden to Suezmax Rates

zoomIllustration; Image Courtesy: Teekay The Suezmax fleet witnessed a net fleet growth of 9.6% in the 12 months from August 2016, putting more pressure on spot rates, according to Poten & Partners. During the period the Suezmax fleet increased by 43 tankers, reaching a total of 492 on August 1, 2017, compared to 449 units reported a year earlier. The delivery of 50 Suezmaxes combined with the removal of 7 units led to a net fleet growth of 9.6%. The growth represents almost double the 5% ton-mile demand growth seen in the same period, as aggregate ton miles for the segment increased from 1,098 to 1,153 billion, while the total number of voyages declined by 2.1% from 3,002 in 2016 to 2,940 in 2017. There are still 70 Suezmaxes on order, 23 set for delivery later this year, 42 in 2018 and 5 so far for delivery in 2019. Poten & Partners noted that it is an encouraging sign that only 8 Suezmaxes have been ordered year-to-date. Seasonal factors will likely push rates up again in the coming months, but ongoing supply side restraint is critical if we want to experience a sustained freight market recovery. The Suezmax tankers have performed poorly so far this year. Namely, earnings on the benchmark Bonny (West Africa) to Philadelphia route are currently around USD 7,400/day, which is barely enough to cover operating expenses. The year-to-date average for this route has been USD 12,600/day, as compared to USD 23,700/day last year and USD 41,300/day in 2015.