OWNER OF VLCC TANKERS

Owner of VLCC Tankers



Owner of VLCC Tankers

Introduction

There could be mainly two kinds of market in the oil tanker industry a period charter market and the spot market that distinct in the way trade is carried. Spot market could be defined as, a vessel rents merely for a particular predefined transportations. Specifically, ship owner decided to take cargo merely on one event between two particular ports in the next future, generally in two weeks on which the agreements were made. In contrast, period charter market has the trade concerned real ships as they were rented on a long term basis with or with no crews, maintenance and repairs. These ships are hired for a particular time, a given number of voyages or the movement of a certain quantity of oil between specific points (Vassiliou, 2009, p.103).

Discussion

VLCC stands for Very Large Crude Carriers, This is a class of supertankers with a deadweight is between 150 000 tones and 320 000 tones (early size ULCC) (VLCC's, 1983, p.96). These ships cannot pass through the Suez Canal, or that of Panama, must go through the great capes. They carry only crude oil, from major production centers (mainly in the Middle East) to the terminals European, American and East Asian. It has existed almost a thousand of these ships, but the majority is no longer in use following the oil crisis of the 1970s. Recent constructions are less ambitious and rarely exceed 300,000 tons. There are difference sizes of crude oils tankers.

Owner seemed to act such as gamblers because they preferred to trade with VLCCs and ULCCs. Which, accounted for the largest types of tanker and these had been developed in order to bring crude oil from the Middle East to Europe and Japan. However, in 1967 the Suez Canal had been closed having affected the demand of enormous oil carriers. Since the distance had grown significantly its demand had started to increase in the early 1970's. As a result, the average cost of tanker transportation can be seen to decrease from 2. 25 dollars/barrel to 0.95 dollars/barrel by 1970 (VLCC's, 1983, p.96). Moreover, according to the tanker spot rates it can be concluded that from the appearance of high demand for VLCCs and ULCCs had driven to diminishing average freight rates in the spot market which almost perfectly corresponds to the rates in the tanker period charter market. In both markets large tankers had lower freight rates than that of Medium and Large 2 types.

Secondly, owner's had placed more early orders for VLCCs and ULCCs than other nationalities, and had run their fleet mainly on the spot market. Trading on the spot market was based on the World scale index. It concerns highly volatile market characteristics as high net profits attracted wealthy ship owners with low risk aversion. Thus, competition with many participants had taken place which had led the World scale index to decrease. Scandinavians had invested a lot, they had mainly owned fleets than chartered ones and ...