Climate Change Hysteria and COVID-19: Disrupting Shipping Networks
Due to pressure from the “decarbonization” of the shipping industry camp, the ratio of crude tanker capacity now on order to crude tanker capacity currently in service has fallen to an all-time low of just 2.7 per cent.
The Residual-Value Risk: Tanker Owners’ Fear of Obsolescence
The owners of tankers that use such products are delaying the order of new ships until it is clear which direction the ‘clean’ energy industry is going to take because the use of earth-based fuels like oil and petrol is doomed. After all, the climate change brigade wants these made obsolete.
According to Greg Miller’s article for Freight Waves, “to decarbonize shipping, you either need an onboard carbon-capture system (which doesn’t exist yet) or to build new vessels that burn something other than fuel oil.” “The rules governing this new fuel have not yet been written. Why then, in the business of producing money, would tanker owners take the residual-value risk of ordering ships that would become prematurely outdated once the laws are written? They haven’t and won’t, is the correct response. A historically low number of oil and product tankers are now being ordered.
Disruption in Shipping Networks: Climate Change Hysteria and COVID-19:
Global shipping and supply networks are coming to a grinding standstill due to climate change hysteria and the ongoing effects of COVID-19.
Challenges in Ordering Pricey Ships with Unknown Propulsion Technologies:
On the product tanker side, where the order book-to-fleet ratio has plummeted to only 6.1 per cent, the situation is almost as dire. Once more, this is because no one wants to order new ships that rely on fuel technology that is subject to stricter regulations.
The catastrophic situation was described by Jefferies analyst Omar Nokta as “what happens when you go several years without investing [in new capacity].”
The Dying Industry: Future Prospects of Crude Tanker Orders:
After several miserable years of COVID-related supply chain failures, the owners of crude and product tankers just recently began to turn a profit; 2020 and 2021 were the two worst years for the sector in thirty years.
According to Miller, the normal timeline for the business is “a two- to three-year lag between when an order is placed and when a new tanker is delivered.” “These assets have a 20–25 year lifespan. A new build that is ordered now will probably be in use in 2050.
The Impact on Tanker Orders in a Decarbonizing World:
What will tankers ordered today carry in their final years of operation if the world is genuinely decarbonizing and moving away from the usage of fossil fuels?
The obvious response is that they might carry nothing, which explains why no one is placing any fresh orders. In summary, the world’s shipping sector appears to be coming to a grinding halt as a result of both climate change and disease hysteria, which together have obliterated the tanker industry and the world’s supply lines in general.
Limited Exception for New Tanker Orders:
According to Bob Burke, CEO of Ridgebury Tankers, capital discipline, which doesn’t even exist in a market like this, has nothing to do with the overall absence of tank orders.
Ordering pricey ships with unknown propulsion technologies is simply not in our best interests, he said.
According to Maersk Tankers CEO Christian Ingerslev, the only parties now putting orders for new tankers either have some sort of tax incentive to do so or are receiving support from a longer-term charter, “typically for a dual-fuel design.”
Nothing more is being ordered, though.
