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DNV GL examines the latest regulatory developments and the tanker market

Tanker Working Group
The participants of the DNV GL Tanker Working Group in Hamburg.
DNV GL’s Tanker Working Group looked at the latest trends in the tanker segment with a special focus on the impact of upcoming emissions regulations at its 31st meeting in Hamburg recently. Some 25 representatives from the tanker industry met with DNV GL experts in the classification society’s maritime headquarters to hear presentations and participate in informal discussions.
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“The Tanker Working Group is a great place for industry representatives and DNV GL to share ideas and the latest news on regulatory developments, innovations, and the challenges and opportunities for the sector,” said Catrine Vestereng, Business Director Tankers at DNV GL. For us as a classification society, the forum offers valuable insights into the most common issues our customers face, letting us tap into their experience to help us fine tune the support we provide.”

Eirik Nyhus, Director Environment at DNV GL, spoke about the implications of upcoming emissions regulations and gave an update on the implementation of the Ballast Water Management Convention. 

The upcoming entry into force of the convention puts a lot of time pressure on the industry to install the systems on time, said Nyhus. “While there has been a proposal to push the enforcement date for the D-2 standard, which covers ballast water treatment, back a few years – whether or not this will be accepted will remain unclear, at least until the next MEPC 71 in July 2017.” 

“Meanwhile, there have been some developments on the issue of USCG approval of ballast water treatment systems. Alfa Laval, Optimarin and OceanSaver have become some of the first suppliers to apply for type approval to the USCG”, Nyhus said. DNV GL submitted the applications in September and expects to submit additional type approval applications for further systems before the end of the year. These ballast water treatment systems include UV systems, electrolytic systems and chemical injection systems.

In his update on the results of the latest MEPC meeting, Nyhus also gave an overview of some incoming regulations. “The committee has already agreed on making the North Sea and the Baltic Sea nitrogen oxide emission control areas (NECAs), cutting the permitted nitrogen oxide (NOx) emissions by 80 per cent,” Nyhus explained. “The final decision on this issue is a formality and is expected to be taken at the next MEPC meeting. The new NECAs would become effective for ships keel-laid after 1 January 2021,” he said. Currently, the only places where IMO NOx Tier III requirements are already enforced are the North American and US Caribbean emission control areas. 

Jakub Walenkiewicz, Principal Market Analyst for Business Development Projects at DNV GL, gave a market update for the tanker segment. “Overall, seaborne trade grew by about 2.4 per cent in 2016 – this figure is 40 per cent lower than the compound annual growth rate between 2010 and 2014.  It can be attributed to a slower economic growth, which simply did not accelerate as fast as previously anticipated”, he explained. "In 2017 we expect the seaborne trade growth to be similar to the current year, however the oil trade growth is expected to decelerate to some two per cent (crude and products combined). Unfortunately, the lower trade growth coincides with much increased fleet supply, which in 2017 will exceed five per cent for both crude and products tankers", Walenkiewicz said. 

The outlook for 2017 remains challenging, mainly due to the fleet growth. With limited demand growth, rates are likely to come under substantial pressure. “However, we still expect scrapping to accelerate, as the favourable markets have prevented owners from sending their older ships to the recycling yards. With a growing pressure on earnings, we are likely to see a growing number of ships being removed from the market”, he explained. 

DNV GL is cautiously more optimistic about VLCCs, as there are fewer deliveries compared to Suezmax and Aframax vessels. In addition, this segment is boosted by growing demand from Asia (particularly from China and India). On the product side the MR tankers may experience slightly higher contracting activity, as the order book in this sector quickly gets exhausted. In 2017 DNV GL expects some 70 ships to be delivered which amounts to half the number of ships that were delivered in 2016. 

About the Tanker Working Group

The Tanker Working Group (TWG) was established in 2006 to create a representative body for the German tanker operator community and is respected by many international organizations, like INTERTANKO, BIMCO etc. The DNV GL Tanker Working Group is a personal membership group allowing for in-depth discussions between experts, including benchmarking. It acts as an information exchange platform for best practice and topics related to daily tanker operations.