Word Count: 3000 + Graphical and Tabular Evidence.
Deadline: 18.12.20. 20:00hrs.
(1)The coursework in this context is an academic piece of work that will be assessed for its academic and professional integrity.
Citation in the text and a list of references are required.
(2) It is anticipated that a mixture of economic and accountancy theory, concepts and empirical evidence drawn from the tanker market will be offered.
This assignment requires you to explore some of the maritime economics and accountancy decisions in tanker management. Your (fictional) company, Merv Tankships are considering their future as owner and/charterer. The latest market report (below) is not too optimistic and caution is advised.
in International Shipping News 15/10/2020
”The record-breaking VLCC fixtures that occurred during the first half of 2020 seem a lifetime ago. As we approach autumn, following a summer characterized by travel uncertainty, low demand levels and wild fluctuations between optimism that the coronavirus had been contained and pessimism that a second wave was around the corner, the tanker trade is looking in poor health. The wave of floating storage fixtures had the effect of removing a significant amount of tonnage from the market at the same time as a number of importers went on a buying spree to make the most of low oil prices. The market dynamic has now shifted dramatically.”
However, the market is occasionally enlivened, even boosted by occasional periods of soaring freight earnings:
“Daily tanker earnings reach $300,000 as traders add to Saudi-led tonnage frenzy
Oil traders and Asian refiners charter a further 25 VLCCs in past 48-hours, accelerating the upward rates trajectory”
• Lloyd’s List, 11 Mar 2020
Figure 1 Shows that the overall trend is for a long-run increase in tanker tonnage; however between the market highs there are also periods of serious depression. Figure 2 illustrates the erratic nature of the tanker market.
Figure 2 speaks to the erratic nature of the tanker market. A number of causal events conspired to force up (and down) rates dramatically. These include:
• President Trump’s embargo on COSCO and Iranian owned or chartered tankers – leading to a tonnage shortage;
• Price War between Saudi Arabia and Russia – extra oil pumped brought “bargain basement” prices, prompting a stampede to buy and store cheap oil – boom time for tankers used for storage.