Med Handysize tanker glut sends rates to record low

Mediterranean Handysize tanker freight rates for clean oil product cargoes have hit a record low for the second time this month, after a significant supply increase in the past two weeks. Many shipowners are now making negative returns on a number of voyages.

The cross-Mediterranean rate was Worldscale (WS)67.5 or $4.86/t on 9 October.

The number of available tankers has risen because of lower demand and quicker voyage-completion times.

Overall product tanker loadings in the Mediterranean and the Black Sea are down year-on-year, with Handysize loadings in the two regions lower by 8pc since 1 September, according to Vortexa. This is compounded by shorter turnaround times between ports, thanks to easing Covid-19-related delays.

Tonnage availability in the Mediterranean has increased five-fold since 1 September, according to shipbrokers. The number of tankers available to load within three days in Malta — a regional reference loading location — has risen from fewer than 10 in the week ending 4 September to more than 30 in the week ending 9 October. The rate on the cross-Mediterranean route closed at WS145 or $10.44/t on 4 September and would rise to WS155 or $11.16/t by 10 September, but fell to WS75 or $5.40/t by 1 October — then a record low — and has fallen again since.

Charterers loaded 4.68mn t of clean products in the Mediterranean on Handysizes in September, or just over five vessels per day based on 30,000t cargoes. These include tankers not trading in the spot market and therefore excluded from the number of available tankers seen on shipbroker reports.

At the new record-low rates many shipowners are making a loss on each voyage, with the average time-charter equivalent (TCE) return between -$4,000/d and -$6,000/d, according to shipbrokers. This does not include tanker operating costs, which are a further $5,000-7,000/d.

By Nicolas Kyriakoglou