Following a decline from the previous month, freight rates in the tanker market
saw a relative recovery month-on-month in March, increasing particularly in the
dirty tanker market. This was mainly supported by higher rates for VLCC and
Aframax segments, which showed average gains of 12% and 11%, respectively.
Tanker market freight rates and requirements fluctuated during the course of the
month based on tonnage demand levels versus tonnage availability – which
stayed ample in many cases. Delays at loading and discharging ports supported
freight rates as well. Suezmax was the exception; reported routes reflected a
decline on the back of unbalanced trading conditions, reflected in an average
drop of 9% m-o-m. The clean tanker market showed a decline in freight rates by
5% from the previous month on the back of weak sentiment, which was dominant
for all West of Suez fixtures.
According to preliminary data, global fixtures increased by 8.4% in March compared
with the previous month. OPEC spot fixtures were up by 4.9% or 0.57 mb/d to
average 12.22 mb/d. Fixtures on the Middle East-to-East route averaged 5.24 mb/d in
March, down by 0.92 mb/d from one month ago, while those on the Middle East-to-
West route averaged 3.24 mb/d. Outside the Middle East, fixtures averaged 3.74 mb/d,
showing a increase of 0.36 mb/d. Compared with the same period a year earlier, global
fixtures indicated growth of 5% in March.
Sailings and arrivals
Preliminary data show that OPEC sailings declined by 2% in March to average
24.09 mb/d, lower by 5% than the same month a year earlier. Middle East sailings
remained at the same level as a month before. March arrivals were mixed, registering
increases in the Far East and Europe of 2.8% and 3.7%, respectively, from a month
earlier, while arrivals to North America and West Asia dropped by 0.6% and 3%,
respectively, to average 9.95 mb/d and 4.63 mb/d.
Spot freight rates
March started with a carryover of tonnage oversupply, weighing heavily on freight rates
and responsible for the significant drop registered the month before. VLCC activity was
higher at the beginning of March, though rates remained underpinned, mostly not
responding to the increased activity seen on several routes. Later in the month,
increased delays in far eastern ports led to considerable thinning of vessels on offer,
which, in combination with higher chartering requirements in the Middle East, pushed
VLCC rates up for all major trading routes, particularly for first-decade loadings in April.
Thus, Middle East-to-East freight rates rose by 20%, up by 37% from the extreme lows
seen during the same month in 2015. Westbound fixtures were also positively affected,
showing average gains of 13% from a month before, as freight rates for tankers
operating on the Middle East-to-West route averaged WS40 points, up by 38% y-o-y.
The West African market was not isolated from the situation in the Middle East. West
Africa-to-East freight rates followed the same pattern, increasing by 6% to stand at
WS71 points, supported mainly by loading requirements from Indian charterers.
Following a spike, VLCC freight rates were corrected down as the market came into
The Suezmax market was unbalanced in March, continuing to show a significant drop
in freight rates similar to that seen the previous month. Increasing Suezmax tonnage
buildup was the main reason behind the drop in freight rates. The increase in activity
levels at a later stage was not enough to reverse a declining trend, as freight rates
were often flat, despite the relative benefit of a firming VLCC market and split cargo
options, in addition to reported storage requirements. Suezmax average freight rates
dropped on reported routes, despite some fluctuation on the back of ullage problems in
the East, which caused uncertainty in loading programmes. Moreover, reduced delays
in the Turkish Straits added to softening rates. Freight rates for tankers on the West
Africa-to-US Gulf Coast (USGC) route declined by 11% to average WS69 points, and
Northwest Europe (NWE)-to-USGC freight rates averaged WS70 points, down by 6%
from a month earlier. Freight rates on both routes remained lower than for the same
months in 2015, by 22% and 11%, respectively.
Aframax freight rates saw a mixed pattern in March. As seen in larger vessels,
Aframax also suffered from increased availability at the beginning of the month, in
combination with moderate tonnage demand.
In the North Sea and the Baltics, freight rates were mostly flat during the month, pinned
to low levels. However, loading requirements were relatively better when April cargoes
came into the market. The Aframax market achieved gains in March in both directions
of the Mediterranean. Freight rates on the Mediterranean-to-Mediterranean and
Mediterranean-to-NWE routes increased from one month ago by 16% and 13%, to
average WS106 and WS98 points, respectively. Although Mediterranean rates for
March are considered to be the highest in the first quarter of 2016, they remain
relatively lower than in the previous year by 9% and 10%, respectively.
Rates in the Caribbean were affected by delays in the US Gulf as vessels with
confirmed loading schedules were limited. Rates in the Caribbean saw a significant
drop later, mainly due to a lack of firm inquiries, and the tonnage position list was
prolonged. Bad weather also affected rates negatively, as ship owners hesitated to
offer their vessels under unconfirmed operating conditions. Thus, freight rates for
Aframax tankers operating on the Caribbean-to-US East Coast (USEC) declined by
11% from the previous month to average WS117 points.
Clean spot freight rates
In March, clean tanker spot freight rates took different directions. West of Suez showed
a drop by 13% from the previous month. The medium-range (MR) tanker market in the
West weakened in March, as freight rates declined on several routes.
In the Atlantic, the MR market was weak as a result of low activity and thin inquiries in
general. The Mediterranean chartering market weakened in March as vessel availability
was ample. Freight rates dropped despite some replacements, though overall tonnage
availability remained high in the Black Sea and the Mediterranean. Thus,
Mediterranean-to-Mediterranean and Mediterranean-to-NWE clean spot freight rates
edged down by 13% each to stand at WS127 points and WS136 points, respectively.
Spot freight rates for the NWE-to-US routes showed the highest gains, though down by
13% from a month earlier to stand at WS101 points.
In East of Suez, adequate activity was seen in the Middle East, mainly for long-range
(LR) tanker operations on long-haul voyages to the east. However, the LR market later
slowed, though the MR tanker market stayed mostly steady, with rates maintained at
acceptable levels before firming as tonnage demand picked up. A healthier market in
the East encouraged ship owners to head that way, in order to chase firmer sentiment
on reported routes. Rates for tankers trading on the Singapore-to-East route increased
by 11%, while the Middle East-to-East route rate showed a decline of 8%. They stood
at WS115 points and WS139 points, respectively.