Rising demand for oil tankers bolsters maritime sector

The increased demand for transportation of crude oil is helping in the revival of the maritime industry, although the lingering effects of the slow global economic recovery can still be felt in the demand for dry bulk cargo vessels.

In fact, some companies are converting their new build orders from dry bulk vessels to tanker ships, according to Svein Engh, group head and managing director of CIT Maritime Finance.

''The overall maritime sector is experiencing a slow recovery,'' said Engh.

''Although supply side issues in the dry bulk and tanker sectors are further hampering growth, crude-carriers, which support the production and transportation of gas, are in demand, which is helping fuel the industry as a whole,'' he said.

According to Engh, US shale production is a potential benefit for tankers. Despite declining oil prices, the US shale boom has resulted in increased crude exports, rising 34 per cent in November to 502,000 barrels a day – the most since 1920.

Today the US is the 17th largest exporter of crude oil, and with the 114th Congress expected to review legislation that could repeal the ban on crude exports to select markets, an increase in tanker demand may follow, he said.

However, a glut of ships that came to the market over the last few years is inhibiting a faster recovery. Other factors that hamper faster recovery include the need for companies to be compliant with new regulations regarding clean fuel and the addition of ballast water treatment systems, declining steel production in China as well as falling Chinese imports and reduced Brazilian iron ore exports.

CIT is a division of CIT Group Inc, a leading provider of commercial lending and leasing services.