VLCC segment has experienced a noticeable decline since the end of the first quarter of this year, in contrast to the growth observed in dirty tonne days.
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This week’s analysis highlights the contrasting trends in dirty tonne days versus VLCC tonne days. The VLCC segment has experienced a noticeable decline since the end of the first quarter of this year, in contrast to the growth observed in dirty tonne days.
This week’s special focus delves into the dynamics between dirty tonne days and VLCC tonne days. The data reveals a distinct downward trend in VLCC tonne days, particularly noticeable from the end of the first quarter of this year. This trend suggests a weakening in the VLCC segment, reflecting broader market challenges.
In contrast, the dirty tonne days experienced signs of recovery in early September. However, this increase was short-lived, as recent estimates indicate a renewed downward trend. The decline in VLCC tonne days is contributing to a generally bearish sentiment in the market.
On a more positive note, August concluded with a significant upward trend in seaborne crude oil shipments to China, a trend expected to continue as winter demand approaches. This uptick in shipments may provide some support to the market. Last week, we analysed the correlation between vessel supply and market rates in the VLCC AG sector. Our findings highlighted the ongoing challenge of meeting demand, as cargo activity for VLCC AG remains well below the desired benchmark. Despite some positive indicators, the overall outlook for the VLCC market remains cautious as we approach the last quarter of the year. The persistent imbalance between supply and demand suggests that market conditions may remain challenging.
In the oil market, prices have resumed an upward trajectory following a significant interest rate cut by the U.S. Federal Reserve. Last week, Brent crude dipped below $69—a year-low—but has since rebounded to above $74. At 1303 GMT, Brent crude futures were up 90 cents, or 1.2%, reaching $74.55 per barrel. Similarly, WTI crude futures for October rose by 88 cents, or 1.2%, to $71.79 per barrel. The U.S. central bank's decision to cut interest rates by half a percentage point on Wednesday has been a key driver behind this recovery. Typically, lower interest rates stimulate economic activity and boost energy demand. However, this move also signals potential concerns about a weakening U.S. labor market, which could slow economic growth. In contrast, persistent weak demand from China continues to exert downward pressure on oil prices. Data from the Chinese statistics bureau revealed that refinery output in China slowed for the fifth consecutive month in August. Additionally, China's industrial output growth fell to a five-month low last month, with further declines in retail sales and new home prices.
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Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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