Few big carriers set to determine product tank

The battle for the product tank market - a big draw for many investors - is narrowing down among a few big players, including bulk giant Norden.

Danish carriers play a significant role in the market for refined oil products, which tank carriers agree will be a key growth driver in the coming years. One of the biggest, though also most troubled carriers is Torm, which has long focused on the MR range as its traditional segment. However, Torm's biggest challenge is the fact that the carrier will not be able to purchase brand new, fuel efficient ships as long as its ownership structure remains unclear. In other words, Torm is bound to its current fleet until the banks that own the carrier today have been replaced by - most likely - an equity fund.

At the same time, however, fellow players in the market point to Torm's ability to maintain an operation equal to -or better than - most of its competitors.

Close to each other

Maersk Tankers is also experienced in the product tank market, but the carrier is set to focus even more on this segment - and MR in particular - following the company's decision to sell its supertankers to Euronav. The carrier has ordered six MR ships, set for delivery in 2016, a move that serves as a clear indicator that Maersk Tankers considers this - the transport of refined oil products - the market of the future.

And Maersk Tankers' headquarters is not located far from Torm's base north of Copenhagen. And Torm is only a stone's throw from Hafnia Tankers, both in terms of city proximity but also in terms of Hafnia Tankers' executive team, which is headed by former Torm CEO Mikael Skov. Hafnia Tankers has announced that it will launch its product tank venture with 27 ships, of which ten of the fairly new ships were acquired from Lauritzen, while the carrier will take delivery of eight MR newbuildings in 2015 and 2016.

Will the eco-design promises be realized?

The battle - though mainly a vocal one - about the effect of securing new fuel-efficient ships, the so-called eco-design vessels, has its fair share of supporters and opponents - a matter often determined by whether the carrier in question has eco-designs in the pipeline. Maersk Tankers has long been a proponent of retrofitting, though this was more pronounced back when the carrier still saw a potential in keeping the VLCC's and updating them through retrofitting. Norden has also questioned whether the effect of investing in eco-designs is as significant as the yards - and the carriers ordering the vessels - claim it is.

Norden, primarily known as one of the world's largest dry bulk carriers, has announced a new strategy and new investment policy, both of which place the company squarely in the middle of the eco-design product tank wave. In the latest edition of the carrier's magazine, Norden News, Executive Vice President at D/S Norden, Lars Bagge Christensen, talks about the company's decision to bet on product tank.

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During the crisis years, which began with the Lehman collapse in September 2008, the carrier ordered a total of 10 new fuel-efficient product tankers: 4 MR ships, delivered in 2013, 2 Handysize vessels, set for delivery in 2014, and 4 MR ships that will be delivered in 2014 and 2015.

Faith in the market

"This is a significant fleet renewal, which today - after the delivery of four new ships in 2013 - counts a total of 18 owned ships. And this is a renewal that we have been able to perform thanks to Norden's strong financial position, and because the Board of Directors and Executive Management believes in our strategy and our estimates of the opportunities in the market going forward," says Lars Bagge Christensen.

If there is one player in the market keeping a close eye on the Danish carriers' product tank ventures, that would be the quickly up-and-coming US and Monaco-based carrier Scorpio Tankers, as the company with its massive orderbook in direct competition with the Danish and other carriers - such as d'Amico - is set to throw a majority of its ordered fleet into the fray.

Following ship divestments that Torm has been forced to perform, due to Nordea and Danish Ship Finance's decisions to sell their loans in the carrier, Torm's owned fleet is now down to 43 ships. Add to this a number of ships that Torm will continue to operate for their new owners. Maersk Tankers has approximately 80 owned ships after the VLCC divestment.

"The new kid in class," Scorpio Tankers, will enter the field for real this year and next year, as the company will receive most of its ordered newbuildings in this period, 65 vessels in total.

ShippingWatch has paid a visit to and interviewed Scorpio Tankers CEO Robert Bugbee. Read about his plans for the carrier, his investment philosophy, and his relationship to the competition soon here on ShippingWatch.

Broker: Product tank is getting out of hand 

Media: Newbuildings headed for Torm 

Scorpio sells seven VLCC's at big profit 

Lenders seeping out of Torm 

Diamond S: Our MR fleet is IMO 3 classified 

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