I’ve got a Sinking Feeling

Call it either a very precarious situation or the proverbial elephant in the room: hundreds of tankers that, as of next year, will not comply with the IMO and Marpol double hull regulations, and finite shipbreaking capacity. With the phase-out looming and tanker rates, well, having tanked, there are a school of analysts sitting behind their mahogany desks, scratching their heads and wondering why owners haven’t taken the initiative to scrap their older units before the regulations requires them to. And this is an excellent point. By delaying the inevitable, owners of older ships are compounding an already oversupplied tanker market today while leaving shipbreakers to deal with a massive influx of ships to break in 2010. But, a debt free ship making a dollar is still making a dollar. That’s a strong case to stay afloat and I would have probably done the same. But that leaves next years’ little conundrum: where will all these tankers go?

When it comes to scrapping, there is absolutely no doubt in my mind that the largest tankers, your VLCC’s all the way down to your MR and even handysize won’t have much problem finding a spot on the beach (perhaps after some time in lay-up to make room for them all). My largest concern falls with the smaller tankers where the margins aren’t lucrative enough for the breakers, there are no transponders to track them, no big names that can be shunned in the media, nor a class society to be held accountable. Even if the vast majority of these ships find a coastal/storage haven to call home, there remains a few hundred that will be left with nowhere to go and nothing to do. And although I remain an inherent optimist, I can’t help but think that there may be those considering a more sinister way out of their predicament.

Consider an unlucky situation somewhere in the Pacific. If the ship isn’t worth more than the lubes onboard and you may even have to pay someone to dispose of it, an unlucky accident or loss may all of sudden look like an economically viable option. Even more unsettling is the idea that some potentially unstable or corrupt government in the developing world may offer owners another kind of ‘safe haven’ - for a small fee of course. What these militants/governments/pirates end up doing with these ships is anyone’s guess, but I imagine it won’t involve a Green Passport.

I have no doubt that my paranoid conspiracy theories of the phase-out remain just that. However, for those who perhaps just flirted with the idea of an easy way out of disposing of tonnage, consider yourself ‘out-ed’.

Tina Gilje Abrahamsen

tgi@fearnleys.no

31st of July