Steadying the ship

The tanker sector is navigating twin challenges in 2020: oil market turbulence due to the coronavirus crisis, and a decarbonization drive in the longer term. But shipowners and investors are already starting to adapt, writes Sameer C. Mohindru.

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The global tanker shipping industry is likely to find a new normal in the medium term, with sales of second-hand ships taking center stage while orders for new-builds slow down.

Meanwhile, existing tanker companies may become bigger as ships change hands, or they may form pools to enable better bargaining with charterers, while shying away from ordering new ships.

Uncertainties over how and when the coronavirus pandemic will end are partly behind the new approach, but so is the higher use of greener fuels. The global health crisis hit when the shipping industry was already in the throes of a major transition to a lowsulfur fuel regime, and starting to plan for its eventual decarbonzation.

While in 2020 to date shipowners benefited from a glut of oil supply and the ensuing demand for floating storage, leaner days may be ahead now that crude flows have evened out and global oil consumption has slumped. This, along with the longer-term impact on oil demand from the energy transition, is already having a clear effect on investment in the sector.

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