Oil-Tanker Operators Struggle to Stay Afloat
Many oil-tank operators are struggling to survive after facing losses for several years because of the weaker global economy and fewer shipments to the United States. The world’s combined large and midsize tanker fleet has had more than twenty six billion dollars in losses since 2009 because its rates had fallen below the actual operating costs. Many analysts and ship owners say that the tankers that were ordered during the boom years are just being delivered now, causing an over abundance in the amount of oil-tanks needed, as well as there are also too many ships. The issue of a decline in the need for oil-tanks has not only affected the United States, but also other countries such as China and Europe, where the global oil demand has decreased by over a hundred thousand barrels a day.
Many of these oil-tank companies such as New York’s Overseas Shipholding Group Inc., Belgium’s Eurnav NV, and Greece’s Tsakos Energy Navigation Ltd, all face a decline in business because of the tough market. Due to the tough market, there is expected to be a rise in the rates next year because of fewer ships that will enter the market. I believe that in order to resolve this issue, there will be companies who would have to file for bankruptcy, in order to survive.
Written by: Samantha Chin
Source: The Wall Street Journal