Panagis Zissimatos: TRAITS REGARDING THE MARKET OF TANKERS

As Mr Panagis Zissimatos mention the oil tankers have traditionally played a vital role in
the maritime transportation and in the energy value chain and logistics. Their role mainly
consists of transporting crude oil from production to refinery as well as any other oil
products, such as fuel oil, therefore they are mainly responsible for the transportation of
the main product that keeps the global economy running. Another important trend of the
market is the geographical dispersion of oil commerce, since there is a shift from the
traditional markets and suppliers from Western Asia towards the East Asia and North
America while the increased flows from these areas have supported and boosted the
demand and the business for long haul tankers. 
With respect to the construction of crude oil tankers it should be noted that it is a time
consuming procedure considering that many critical parts and items must be ordered and
produced before the construction of the ship and that their construction takes more than
15 months, while the entire procedure which ranges from the negotiation and the signing
of the newbuilding contract until the vessel is finally delivered may take more than two
years. Furthermore, their size and the particularities in their construction requiring
economies of scale, human resources with expertise in this field and specialised know
how enable only a limited number of sites to build them which are mainly concentrated in
Asia, particularly in Japan, get more info South Korea and China while only few such sites exist in
Europe.  Another important element is that the price for building a new tanker is
influenced by many, various and volatile factors such as the price of energy, the costs of
the raw materials mainly steel, the labor costs and the relative demand for building new
oil tankers. 
The sector of tanker shipping is traditional and long standing within the maritime transport
industry, however it still consists of a highly cyclical business since its freight rates are
affected by numerous factors with supply and demand for vessels still playing a
fundamental role as in every other industry sector. While the supply of vessels is
impacted largely by capital investments flows and financing from the banks and other
investors, demand for vessels is mainly influenced by the demand for oil and petroleum
products in general. The market statistics show that the current trend shifts to the
demolition of tankers since it is observed that the highest number of tankers over the last
15 years, approximately 150 tankers above 25,000 dwt, have been demolished and have
been sent to the recycling sites. This is partly justified by the fact that the industry is not
as lucrative as it used to be resulting in reduced net profits while the scrap prices are
quite attractive, therefore providing shipowners with a strong incentive to scrap their
ships. Considering the above, Panagis Zissimatos expecting that the market has seen
lower than expected number of new ships building and fewer tanker deliveries which has
meant that the growth in tanker supply has resulted in marginal profits for the
shipbuilders. However, it is more than obvious that new opportunities will soon emerge,
therefore all the stakeholders must be ready to adapt to any shift in the market
conditions.
*Panagis Zissimatos is a famous Greek shipowner.

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