The price of bunkers will vary depending on deals that owners or charterers may have in place with fuel suppliers and is further altered by the amount of low sulfur bunkers or gas oil they are required to burn. Bunker fuels is among the main factors to be considered when assesing a tanker owner’s TCE (Time Charter Equivalent). According to the latest report from Mcquilling Services mentioned that the various age profiles of the current trading fleet have an impact on fuel consumption.
“Advancements in technology have improved the fuel efficiencies of new tankers while older tonnage still chasing cargoes have a completely different set of fuel economics. As a result, these varying fuel efficiencies impact the spot rate that tanker owners are willing and / or able to fix at as well as impacting earnings. At present, our calculations do not account for the varying fuels unless specified. We feel that this is in line with industry standards but are aware the methodology may be required to be adapted in the future” said Mcquilling Services.
In its analysis, the US-based analyst mentioned that the calculation of the TCE is a challening fact. “In addition to the fact that owners generally regard consumption statistics of their tanker fleets as a private matter, this daily number is based on a variety of assumptions. The ultimate goal is to reflect market realities in our TCE calculations to gauge market developments and activity. To achieve this we must make various decisions based on available data and discern how it relates to the market. Over the previous years, owners have reduced sailing speeds as overcapacity firmly gripped the market and bunker prices rose. To capture the impact of slow steaming, we reduced our average fleet sailing speed to 13.5 knots at the start of 2012 from the previously used 14.5 knots. We are aware that market conditions will result in vessels operating at different speeds during the ballast and laden legs but adhering to a specific speed is necessary for comparison” said Mcquilling Investors.
Explaining its efforts in reaching a conclusive result through its methodology, the company mentioned that in order to ensure that its TCE calcutations are in line with market realities, it “combed through a variety of information, including sea-trial data, time charter party warranties and knowledge gathered from industry discussions. Based on this activity we compiled new speed
and consumption data and were reminded of the wide range of bunker consumptions within each sector”.
As a result, “in the VLCC sector, the range of consumptions we found was roughly 32 tons at 13.5 knots for both the laden and ballast legs. For Suezmax the range was 16 tons on the laden leg and 22 tons in ballast. In the other vessel Figure 1 also highlights the increased efficiency modern
tonnage has compared to its older counterparts. This wide range of consumptions confirms that TCE calculations are specific to each vessel and reported industry averages should be viewed with extreme care. The upper and lower ends of the consumption range for the sample of VLCC
tankers are indicated by the black dots on the chart. Based on the current spot rate on TD3 the difference in the TCE for a 2005 versus a 2013 built vessel would be approximately US $18,000 per day. The difficulties in gaining access to speed and fuel consumption data for a trading fleet that numbered 3,490 at the beginning of 2012, magnify the challenges of this task. We recognize that it is highly unlikely that our daily assessment of TCE will reflect individual owner’s exact
earnings. However, we hope it will help provide a gauge in a market chalked with inconsistencies and can continue to provide a benchmark for the market’s behavior”, concluded the report.
Nikos Roussanoglou, Bunker Ports News Worldwide