Frontline sees tanker market improving as shipyard orders dry up

OSLO (Reuters): Oil tanker firm Frontline, controlled by shipping tycoon John Fredriksen, expects a stronger market this year as more of the world’s oil is being transported over longer distances, its top executive said on Friday.

“Hopefully we will see an improvement going forward,” the company’s Chief Executive Jens Martin Jensen told Reuters.

“The order book (for new ships) is shrinking and we see that the ton-mile situation is developing positively with incredibly large volumes coming out from West Africa and the Caribbean to China,” he said.

Due to a capacity glut, rates for the largest crude carriers dropped from a peak of more than $40,000 per day in the spring of 2012 to less than $5,000 in the autumn, but have since risen to a level near $30,000.

Jensen said that there seemed to be a better balance in the fleet now compared to the second half of 2012.

The global tanker business, much like dry bulk and container shipping, has been in the doldrums for several years as dozens of new vessels ordered before the 2008 global financial crisis came into service after demand had fallen.