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Tanker Industry International Tanker Market Seaborne transportation (shipping) of crude oil is an integral part of the development of the oil industry. This is a result of the significantly increasing distances between the producing areas and the consuming areas, and the fact that shipping offers the most economical and most flexible way of transporting crude oil in bulk. More than two-thirds of crude oil consumed worldwide is transported by sea from the producers to the consumers by a dedicated fleet of over 2,600 tankers with a carrying capacity of more than 300 million deadweight tons (dwt). Transportation of oil (tanker industry) came to fruition at about the end of the 19th century. Vessels specifications and carrying capacity have increased dramatically and today includes safe tank venting, inert gas systems, crude oil washing, sophisticated engine room control systems and satellite navigation. These developments have all had a significant impact on the safety and efficiency of tanker operations. One of the most significant developments in recent years has been the double hull design, which was introduced in the early 1990s. As a result of international regulations tankers of single hull design is expected to be phased out within the next 5 years. Due to shipping’s inherently international nature, regulations concerning the industry are developed at a global level to ensure uniform regulations on matters relating to security of transportation. The principal regulator is the International Maritime Organization (IMO), which is the United Nations agency responsible for the safety of life at sea and the protection of the environment. In recent years the demand for safety and quality standards covering the seaborne transportation of crude oil and petroleum products have become ever more stringent. This requires continuous investment by the ship owners in systems, equipment and training. In the area of quality, safety and environment, DHT benefits from the resources of OSG which through its wholly owned subsidiary Tanker Management Ltd. is responsible for the technical operation of OSG’s vessels as well as the DHT vessels. OSG employs a dedicated head of Global Safety and Quality who is responsible for setting, implementing and maintaining OSG’s worldwide policies and targets of safety, quality and protection of the environment. Bulk shipping markets in general, and the tanker market in particular, are highly cyclical. The balance between vessel demand (transport) and supply (tankers) combined with expectations of future demand and supply drives freight rates. Freight rates can move by 50 percent or more within a few days. The shipping industry is capital intensive with high fixed costs. With fluctuating revenues, well capitalized companies with strong balance sheets have an advantage. Tanker companies have traditionally had different strategies to maximize the utilization and profitability of their fleet. Commercial pooling of vessels represent one strategy to manage the volatility in freight-rates by improving asset utilization. DHT’s vessels are operated in VLCC, Suezmax and Aframax pools: Tankers International, Suezmax International and Aframax International, respectively. |