Crude oil tanker deliveries hit a new 6-year high in 2017



The seasonal recovering in crude oil tanker earnings failed to materialize in the fourth quarter of last year with rates peaking in late October and softening since. Earnings remain depressed so far in 2018, defying the usual seasonal patterns.
 
The sharp correction in earnings can be mainly attributed to the rapid fleet expansion; in 2017, 132 crude tankers totalling 26.6m-dwt were delivered, including 50 VLCCs, 51 Suezmaxes, 28 Aframaxes and 3 Panamaxes. In terms of number of ships, last year’s deliveries were the highest since 2011.
 
The below graph shows delivery performance in terms of actual deliveries as a percentage of what was scheduled at the beginning of the year. Barring the Aframax segment, all segments had higher delivery rates than in the previous two years. VLCC segment had a historical high delivery rate of 96%, and it is also significantly higher than the past two years’ average of 70%. With the market under downward pressure, we expect delivery rates to drop back down to pre-2015 levels when earnings were at similar levels.

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