The fallout from Russia’s invasion of Ukraine continues to roil the shipping market, with more and more older tankers being used on the lucrative route of transporting Russian oil to China and India.
As Bloomberg reports, at least four tankers aged 15 and older have joined the fleet of vessels delivering Russian oil from the port of Kozmino since May, according to shipping brokers who asked not to be named. The port typically handles about 30 cargoes of ESPO crude oil per month using Aframax vessels, which carry about 700,000 barrels.
While Western sanctions on Moscow have deterred some shipowners from carrying cargoes of Russian oil, the market turmoil has inflated profits for those who still do and also boosted the value of the vessels. Profits for charterers on the Cosmino-China route are still about three times their pre-war level, although they have fallen slightly.
Although 15-year-old ships are still seaworthy, they tend to be less efficient than new builds and may require more maintenance. However, the short, five-day voyage from Cozmino to China, combined with the high profits from running the route, also attracts aging ships.
To attract buyers, carriers are offering slightly lower prices, reducing route fares, freight brokers said. The cost for a delivery from Cosmino to China is now about $1.5 million, slightly below the $1.7 million peak seen in June and July, they added.
The opportunities offered by the route have rekindled interest in used ships. So far this year, the value of older Aframax vessels has increased by almost 60%, with a 15-year-old tanker now worth around $29m, according to data from VesselsValue.
Even after the recent drop in rates, prices are still “inflated compared to historical averages,” said Olivia Watkins, chief valuation analyst at VesselsValue. Something the owners are quick to take advantage of, she said.
So far this year, 58 Aframax vessels have changed hands, a 50% increase on the same period last year, according to VesselsValue. Some of the new ships on the route were bought by shipowners registered in Vietnam and Hong Kong, according to data tracked by Bloomberg and shipbrokers.
Source: Capital
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