The tanker market failed to state a recovery during the first month of 2023, following on the “footsteps” of the last month of 2022. In its latest monthly report, OPEC said that dirty freight rates continued the previous month’s decline in January, with m-o-m losses across all monitored routes. The decline came as rates continued to fall from elevated levels that had been pushed higher by concerns about disruptions due to trade dislocations. However, as trade flows had largely adjusted and with Russian crude trading below price cap levels, the upward pressure eased. VLCCs showed the biggest declines, falling 34%. Suezmax rates fell 32% m-o-m. Aframax rates saw the smallest decline, down 29%, partly supported by longer-haul demand. Clean rates declined for the first time since October 2022, falling 42% on East of Suez routes and 52% on West of Suez routes. Some of the downward pressure was due to ship owners choosing to forego carrying Russian cargos ahead of sanctions, reducing demand for their tankers.
The latest estimates show global spot fixtures continued to decline in January to average 12.1 mb/d. Fixtures fell around 0.9 mb/d or around 7% m-o-m. Compared with the previous year, spot fixtures declined by 1.9 mb/d or around 13%. OPEC spot fixtures declined in January to average 8.4 mb/d. This represents a m-o-m drop of 0.7 mb/d, or 8%. In comparison with the same month in 2022, fixtures decreased by 0.8 mb/d, or more than 8%. Middle East-to-East fixtures fell by 0.5 mb/d, or 10%, to average 4.9 mb/d. Compared with the same month of the previous year, eastward flows from the Middle East declined 1.2 mb/d, or almost 20%. By contrast, spot fixtures from the Middle East-to-West edged up in January, increasing 0.1 mb/d, or 8% m-o-m, to average around 1.3 mb/d. Y-o-y, rates were also higher, gaining 0.5 mb/d, or almost 58%. Outside the Middle East, fixtures dropped 0.3 mb/d or around 12% m-o-m to average 2.2 mb/d. Compared to the same month last year, fixtures on the route slipped by about 2%.
Sailings and arrivals
OPEC sailings partially recovered from the decline in December, averaging 24.8 mb/d in January. This represents a m-o-m increase of almost 2.0 mb/d or close to 8%. Y-o-y, OPEC sailings increased 3.2 mb/d or 15%. Middle East sailings edged higher to average 16.8 mb/d, representing a gain of 0.2 mb/d or over 1%. Y-o-y, sailings from the region increase 0.4 mb/d, or about 3%.
Crude arrivals saw a mixed performance in January, strengthening East of Suez while weakening in the West. Arrivals in North America increased by about 1.0 mb/d, or about 11% m-o-m, to average just under 10.0 mb/d. Y-o-y, arrivals in North America were similarly higher. Arrivals in Europe increased 1.1 mb/d, or just under 1%, to average 12.8 mb/d. European arrivals were broadly unchanged with the same month of the previous year. Arrivals in the Far East declined 0.9 mb/d, or about 5%, to average just under 16 mb/d. Y-o-y, they were around 1.4 mb/d, or just under 10%, higher. West Asian arrivals fell 0.3 mb/d, or about 4%, to average 9.1 mb/d. Y-o-y, arrivals in the region rose 0.6 mb/d, or about 7%.
Dirty tanker freight rates
Very large crude carriers (VLCCs)
VLCC spot rates declined further in January, falling 34% on average m-o-m. However, compared to the same month of the previous year, VLCC rates were still up 53% on average. On the Middle East-to-East route, rates fell 36% m-o-m to average WS49 points. This was still 36% higher y-o-y. Rates on the Middle East-to-West route lost 33% m-o-m to average WS39 points. Y-o-y, rates on the route increased 117%. West Africa-to-East spot rates declined 34% m-o-m to average WS51 points in January. Compared with the same month of the previous year, rates were 38% higher.
Suezmax rates saw an accelerated decline in January, falling 32% m-o-m. Compared with the same month of the previous year, they were still up 94%. Rates on the West Africa-to-US Gulf Coast (USGC) route fell 27% to average WS117 points. Compared with the same month of the previous year, they were 121% higher. Spot freight rates on the USGC-to-Europe route fell 37% compared with the previous month to average WS85 points. Y-o-y, rates were 67% higher
Aframax spot freight rates also joined the general decline. On average, spot Aframax rates fell 29% m-o-m. Compared with the same month of the previous year, rates were 126% higher. The Indonesia-to-East route gave up the gains seen in the previous month, averaging WS249 in January. This represents a decline of 19% m-o-m, although y-o-y rates on the route were still 162% higher. Spot rates on the Caribbean-to-US East Coast (USEC) route continued their sharp decline, falling 42% m-o-m to average WS152 points. Y-o-y, rates were still 57% higher.
Cross-Med spot freight rates declined 30% m-o-m to average WS220 points. They were 134% higher y-o-y. On the Mediterranean-to-Northwest Europe (NWE) route, rates dropped 26% m-o-m to average WS211 points. Compared with the same month of the previous year, they were around 154% higher.
Clean tanker freight rates
Clean spot freight rates declined on all reported routes in January, after having been supported by high tanker demand in the prior two months. On average, rates fell 48% m-o-m but were 46% higher compared with January levels of the previous year.
Rates on the Middle East-to-East route declined 41% in January to average WS211. Y-o-y, rates were up 111%. Freight rates on the Singapore-to-East route rose 43% m-o-m to average WS219 but were 70% higher compared with the same month of the previous year. Spot freight rates on the NWE-to-USEC route fell 49% m-o-m to average WS183 points in January. They were 37% higher y-o-y. Rates for the Cross-Med route declined 53% to average WS205 points, while rates on the Med-to-NWE route lost 52% to average WS212 points. Compared with the same month previous year, rates on the Med routes were 22% and 20% higher, respectively.
Nikos Roussanoglou, Hellenic Shipping News Worldwide