Spot freight rates in January continued the recovery started in 4Q16, showing general improvements
across all tanker sectors. This improved sentiment was seen on all reported routes and in various
Dirty tanker spot freight rates registered gains on all reported vessels, with the highest gains reflected
on Aframax tankers. On average, VLCC spot freight rates increased by 6%, while spot freight rates for
Suezmax went up by 4%. Aframax spot rates increased by 15%, while dirty tanker gains were driven
by a firmer market in West Africa, mainly to eastern destinations – Middle East and Mediterranean – as
well as delays due to congestion in the Turkish Straits and severe weather conditions.
The clean market showed higher monthly freight rates on all reported routes as registered mainly for
medium range tankers, edging up by 40% on the East of Suez and by 16% in the West of Suez.
OPEC spot chartering declined by 0.6% in January compared to the previous month to reach
11.88 mb/d, according to preliminary data. Within the Middle East, spot chartering towards the east
showed a decline of 2%, while towards the west it dropped by 7.9%. Middle East-to-East spot
chartering ended the month at 5.58 mb/d less, while the Middle East-to-West route ended the month at
2.71 mb/d, lower from the 2.95 mb/d registered one month ago. On a y-o-y basis, OPEC spot chartering
in January showed an increase of 12.4% compared to the same month a year ago, while global spot
chartering declined in January by 3.4% compared to the previous month to stand at 16.19 mb/d.
However, this was 12.4% higher compared to the same month a year ago.
Sailings and arrivals
Sailings from OPEC were 0.9% higher in January, standing at 24.28 mb/d, up from 24.07 mb/d in the
previous month and remaining 2% higher than in the same month a year ago. Middle East sailings in
January averaged 17.49 mb/d, down 0.3% from the previous month. Crude oil arrivals into
North America increased by 2.6% in January over the previous month and into West Asia were up by
2.3%. Conversely, crude oil arrivals to Europe and the Far East were all lower m-o-m in January by
0.8% and 3.2%, respectively.
Spot freight rates
The month of January started with slow activity in the chartering market where tonnage demand was
limited for several classes, putting pressure on tanker earnings. Nevertheless, chartering activity
resumed later mainly when third decade requirements came into the market. VLCC activity in
West Africa kept at high levels mainly to the east, reducing the amount of access tonnage and
supporting freight rates in that region. Therefore, average spot freight rates for tankers operating from
West Africa-to-East showed the highest gains from the same class operating on the different routes,
increasing by 8% from the previous month to average WS 84 points. Freight rates for VLCC trading on
both Middle East-to-West and Middle East-to-East showed gains of 6% and 3%, respectively, in
January from a month ago to stand at WS 53 points and WS 84 points, respectively. Generally, VLCC
activity increased for February fixtures, showing an improved sentiment in the Middle East and other
areas for old and modern types of vessels, although gains varied.
Suezmax spot freight rates increased by 4% on average in January over the previous month to stand at
WS 89 points. The average monthly gains came despite a fairly slow start seen at the beginning of the
month, which, combined with a balanced tonnage list, was not enough to support Suezmax freight
rates, particularly in the east. However, a flow of inquiries came into the market, lifting activities in
several areas, including West Africa, the Mediterranean and the North Sea, which resulted in a clear
reduction in the tonnage list, providing support to freight rates. The escalating momentum pushed ship
owners to hold their requirements as they were trying to prevent rates from escalating further. Suezmax
rates in the Mediterranean continued to receive support from the delays in the Turkish Straits as the fog
prolonged the total transit time, reducing spot vessel availability, mainly in the Mediterranean and
Black Sea. While Suezmax class experiencing rate fluctuations in January in accordance with the
activity in the market and the length of the tonnage list, average rates generally increased by 4%
compared with the previous month as the rate for Suezmax operating on the West Africa-to-US route
and NWE-to-US routes both increased by 2% and 7%, respectively, from a month earlier.
Aframax spot freight rates increased in January, up by 15% from a month before, benefiting from the
cold weather as higher fixtures on the ice class ships became a main requirement for loading in some
ports in the Baltic Sea.
Difficult weather conditions caused further delays in the Turkish Straits and in several ports, leading to a
sudden jump in Aframax freight rates in the Mediterranean and Black Sea. Freight rates in the
Mediterranean declined afterwards, despite continued severe weather conditions and the closure of the
Turkish Straits; however, lower volumes of cargoes in the market combined with tonnage build-up,
along with competition from larger vessels, to push down freight rates from the high level they reached
Thus, on average, spot freight rates for tanker trading on the Mediterranean-to-Mediterranean and
Mediterranean-to-NWE increased by 23% and 21%, respectively, from a month ago. In the Caribbean,
Aframax spot freight rates registered a bounce of 14% from a month before for tankers operating on the
Caribbean-to-US route to stand at WS 156 points. Those gains were driven by delays caused by foggy
weather, as well as lighterage requirements. On the other hand, average freight rate on the Indonesiato-East
route exhibited the smallest increase amid other routes, growing by WS 1 point from a month
Clean spot freight rates
As seen in the dirty segment of the market, clean tanker spot freight rates shared the tanker market’s
upward momentum, showing a generally improved sentiment in January from the previous month,
supported mainly by winter demand and severe weather conditions. The gains in the clean tanker
segment were mostly registered for medium range classes while other vessels in the product market did
not share the same fortune.
In the East of Suez, clean tanker spot freight rates experienced an increase of 40% compared with the
previous month. Clean spot freight rates for tankers moving between the Middle East-to-East and
Singapore-to-East routes increased by 40% each to stand at WS 124 points and WS 174 points,
respectively. Spot freight rates for tankers operating on the NWE-to-US East Coast (USEC) route
increased by 41% to average WS 171 points in January.
In the Mediterranean, clean spot freight rates increased in January compared with the previous month,
supported by bad weather conditions as well as delays in the Turkish Straits. Clean spot freight rates
for tankers trading on the Mediterranean-to-Mediterranean route rose by 6% in January compared with
the previous month to average WS 183 points, while clean spot freight rates for tankers operating on
the Mediterranean-to-NWE route gained 8% to stand at WS 198 points.