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Companies investing in efficient vessels beat the market trend, as 120 ecobuild tanker orders predicted for this year

According to a report by Reuters, there has been a rush of orders for new fuel-efficient tankers, which it is suggested, may exacerbate a current glut of ships that carry refined crude oil products, after four years of oversupply and soft demand.

The flip side of more choice would normally be greater price competition however, leading to lower prices as well as, if they are indeed more obviously profitable to operate, reduced CO2 emissions.

The report also suggest that firms with money to invest in new ships should do well, but the building surge spells trouble for owners stuck with old ships in an over-supplied market.

Scorpio Tankers Inc, Frontline 2012 Ltd, Navios Maritime Acquisition Corp, Stena AB and Vitol SA are listed as companies that have either bought or ordered fuel-efficient product tankers.

These "eco" tankers can help cut fuel costs by more than 20%, according to Scorpio, with fuel typically requiring up 70-90% of the cost of running tankers.

"Going forward, we see limited supply growth and think Scorpio Tankers is well positioned to take advantage of stronger utilization and improved freight rates," said Jarle Sjo, chief investment officer of Oslo-based ODIN Forvaltning AS, which holds a 0.65% stake in Scorpio Tankers.

 

Improved efficiency ignored prior to 2008, when margins were greater.

Until 2008 "There wasn't this incentive for owners to ask for, or suppliers to provide improved fuel-efficiency," said Scorpio's chief operating officer, Cameron Mackey. "It was just about shipyards producing as many ships as quickly as they could."

Scorpio owns five so-called ecobuild medium-range product tankers that save money because of their high-tech engines and more efficient hull shape, among other things.

The company has ordered five more such tankers with deliveries expected in 2013 and 2014.

The industry tally now up to 120 orders this year.

"I think it's certainly likely that other companies will follow Scorpio in ordering new eco-vessels," said Chappell.

 

Scorpio Tankers outperforms the rest of the market having invested in vessel efficiency 

Shares of Scorpio Tankers, which was the first to order the ecobuild tankers, have risen about 15% this year, while those of rival Navios Maritime Acquisition Corp have fallen nearly 3%. The PHLX Marine Shipping Index  has dropped 25%.

 

Fuel-efficient product tankers give owners an edge

 

 

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