April 5th 2020 | By Ioannis Psarros, Kostis Chatzimichalis, Semiramis Assimakopoulou

Many estimate that global onshore storage may max out within the next few weeks which could drive additional demand to use tankers as Floating Storage. In anticipation of oil production cuts that may soon be announced through an OPEC+ meeting, we analyzed three scenarios to quantify the potential impact of Crude Oil oversupply on global VLCC supply.

At Signal, we are obsessed with counting vessels and understanding short term vessel commercial availability. We’ve been especially interested in monitoring the VLCC segment since it has been driving the freight market lately.

We did an analysis to quantify how many VLCCs could be required for use as floating storage — and therefore made unavailable — in the face of a global oversupply of Crude oil.We decided to analyze three potential oversupply scenarios for Crude oil overproduction: “Low”, “Mid”, and “Black Swan” and their impact on VLCC supply. We have used the following three key assumptions:

1. Approximate daily crude production at 85,000,000 bpd
2. Actual ullage levels of onshore crude storage as monitored by our friends at OilX in their recent report on Global crude oil storage of 650,000,000 bls
3. Assumed recovery time of 3 months back to normal levels of Supply / Demand

In the table below, you can see the results of this analysis basis the assumptions mentioned above at three different levels of Oversupply (Production-Demand).

Obviously, the numbers are highly dependent on a number of factors, including:

• OPEC’s decision to cut production further
• The reaction of other oil production facilities
• The extent of the reduction in demand from refineries
• The relative timing of these events

The “Low” Case scenario is almost where we stand at the moment. The “Mid” Case scenario, visualized in the graph below, would result in more than 50% of the VLCC capacity or a mix of VLCC, Suez, Afras being relegated to floating storage:

Monitoring cargoes and associated drops in Vessel supply in real-time will become even more relevant in the current global context. Let’s see how the end of April and beginning of May will evolve during the next few days. We saw an increase of 5% over March 2019 and 20% percent over February 2020.

We will continue to keep an eye on cargoes count and associated vessel supply and will take a closer look at similar events in the past and how the market has reacted. The big question is at what point freight rates become uneconomical and when the market would reach the “tipping point” where freight for normal VLCC voyages due to reduced vessel supply will balance storage rates and smaller crude carriers for storage would be considered.

Please contact support@thesignalgroup.com with any questions.

Here you can request a trial of The Signal Ocean Platform.

How will the OPEC oil production cuts impact the requirements for floating oil storage? was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

China is now restricting vessels arriving from nine countries including the U.S. and Singapore in efforts to limit the spread of coronavirus by visiting ships and their crew, according to Bloomberg.

What if the whole world — or a large part of the world — started imposing such quarantines? What would longer voyages mean for overall vessel availability?

MR1s, with shorter average voyage lengths, would be most impacted

VLCCs, which typically have ballast or laden legs exceeding 14 days, would be minimally affected by the imposition of both a partial and a global quarantine.

Assuming that demand stays the same, we could see a significant impact on vessel supply of a similar order of magnitude.

Which countries, if made part of the quarantine, would account for the greatest increase in total voyage duration?

Countries where volumes are high and short laden legs originate would contribute a larger percentage of increase in total voyage duration, if global ports were to add them to their list of quarantine countries.

Additional commercial impacts of quarantines

The global or partial imposition of 14-day quarantines will certainly shape the tanker shipping market.

Of course, we may also see a decrease in vessel demand that could blunt the impact of reduced vessel supply in the market.

One of the most significant impacts may be that the dollar-per-ton rate of short voyages could become much more expensive compared to long-haul voyages.

Longstanding trade routes may experience a disturbance as charter parties seek to avoid calling ports where additional quarantine-related wait times are required.

We will continue to monitor the situation and update our analysis as new developments come to light.

To learn more about Signal Ocean, request a trial here: www.signalocean.com/platform

Notes:

To produce this analysis, we leveraged Signal Ocean Technology, and used Signal Maritime’s data. We looked at the length of the ballast and laden legs for all voyages that occurred since January 1, 2019, across MR1, MR2, Panamax, Aframax, Suezmax, and VLCC (dirty and clean segments) and adjusted the corresponding duration to reflect the imposition of a) a partial global quarantine and b) a global quarantine. We ignored delays due to canals crossing, bunkering operations, repairs, etc.

To learn more about datasets, contact m.maciver@thesignalgroup.com.

Here’s how quarantines could impact the tanker shipping market was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

At Signal, we’re obsessed with counting vessels. So, we kept a close eye on vessel supply in the wake of the March 9th drop in oil prices.

Just two days after the dramatic drop in prices, on March 11, 2020, we noticed an unusually large number of VLCCs that had gone “On Subs” (i.e. were placed under contract and, therefore, removed from the available vessel supply).

We noted that there were two to three times the average number of daily fixtures compared to what we counted over the last several days and weeks.

The fixtures were both for voyages loading in the Arabian Gulf and bound for the Far East as well as for Oil storage purposes.

This increased fixture activity had an immediate effect on vessel supply and freight rates for VLCCs. As supply drops, we see a corresponding surge in rates:

The above graph is another way to visualize the surge in the number of fixtures we described above, which occurred on March 11. The number of available VLCC’s drops on one day from 71 to 45. On March 12, rates climbed from 130 WS to approximately 157 WS.

While these dynamics start in the VLCC vessel segment, they are replicated shortly thereafter across the other dirty vessel classes:

Oil prices (as of the time of writing this article) have continued to drop and are now below the level reported on March 9, 2020. We will continue to keep an eye on the ways this drop will impact the Dirty Tankers Freight Market.

Please contact support@thesignalgroup.com with any questions.

What does the oil price drop mean for the Dirty Tankers Freight market? was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

By The Signal Group

Freight rates for the VLCC market remain depressed. Interestingly — but not surprisingly — this decrease correlates with an increase in vessel supply.

In early February, we noted a sharp increase in the supply of commercially available VLCC’s in the spot market that can load in the Arabian Gulf (20 days forward).

Multiple factors, of course, contribute to this.

The return of some of Cosco’s VLCC’s, after the lifting of sanctions, are part of this increased vessel supply.

Here are a few illustrative examples of Cosco VLCC’s recent voyages. This shows how we can use The Signal Ocean Platform to view granular voyage details.

• Cosbright Lake, a Cosco VLCC, had not traded since the end of October 2019.

• Cosglad Lake, another Cosco VLCC, finished a voyage on October 12, 2019 in Ma Day Island and has been unemployed since then (for over 4 months). Now, we see that a new voyage has been scheduled to start in February.

So far, we haven’t observed a year-over-year decrease in the number of Fixtures loading in the East since the outbreak of the coronavirus, so we don’t think decreased demand from China is driving this vessel supply at this point.

For more, reach out to us at support@thesignalgroup.com.

Is the Coronavirus or Cosco behind a recent increase in VLCC supply? was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

January 06, 2020

Signal Maritime Services Ltd. (Signal) and Heidmar Inc. (Heidmar) have agreed a milestone partnership, under which Signal will manage a joint tanker fleet using its proprietary technology and analytical approach. Signal’s Artificial-Intelligence-backed solution to pool management has consistently delivered superior earnings to its pool members since its launch in 2018.

Commercial management of 18 Aframax vessels in Heidmar’s Sigma Pool will be handled by Signal with immediate effect, with a transition period of one month.

Signal will also be working with the Heidmar team to manage the LR2 vessels in its Sigma Pool, the Suezmax vessels in the Bluefin Pool and the VLCC vessels in the Seawolf Pool. The vessels within these pools will remain within their existing structures, but benefit from access to Signal’s capabilities.

Athens headquartered Signal Maritime Services is a commercial ship management company with a twist, bringing together shipping best practice with internet-age advanced analytics and management methods. The company is focused on producing responsive, high-performance and sustainable commercial management for a growing, modern fleet.

Founded in 1984, Heidmar Inc. is one of the world’s leading commercial tanker operators with a fleet of about 50 vessels, including VLCC, Suezmax, Aframax/LR2 and Panamax tankers entered into its pools by 20 separate companies. From its offices in Singapore, London, Houston and Connecticut, the company’s focus has always been commercial performance, pool management, reporting and compliance.

Ioannis Martinos, the CEO at Signal Group commented: “We are excited to join forces with Heidmar and look forward to bringing a stronger and better service to the market through this collaboration. Signal has delivered leading performance since its launch in 2018, through a highly driven team and an expertly-used technology solution. We are confident that the combination of the Signal team and our technology will continue delivering a strong performance for all our pool partners.”

George Economou, shareholder of Heidmar commented: “Digitalization and consolidation are a theme of today’s market and a necessity to provide relevant and superior customer service. The pooling business is highly competitive and we believe the combination of Signal’s technology with a sizable fleet will provide the right mix for a successful pool.”

For more information please visit www.thesignalgroup.com

For further details please contact:

Megan MacIver

E: m.maciver@thesignalgroup.com

T: +30 210 89 28 038

New Signal Maritime and Heidmar partnership was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

October 28, 2019

Signal Ocean and international shipbroker Simpson Spence Young have announced today that they have entered into a strategic partnership as investors to work together to bring high-impact technology solutions to the commercial ship management of dry bulk carriers.

Signal Ocean is a technology start-up with a strong shipping pedigree that has successfully launched The Signal Ocean Platform in 2018, offering already widely adopted decision-support solutions to chartering professionals in the larger crude-oil tanker segments.

Simpson Spence Young (SSY) is the world’s largest independent and privately owned shipbroker, with 20 offices worldwide and over 400 people serving all the major shipping and commodity locations around the globe. Together, the two companies will develop solutions and services for dry-bulk chartering professionals.

Ioannis Martinos, the CEO at Signal commented, “Our strategic collaboration with SSY, one of the worlds largest and most forward thinking shipbrokers, puts us in a unique position to develop a deeply value-adding solution for the dry market. Our ambition is to cover all dry vessel sizes, giving our users superior minute by minute situational awareness of dry market activity.”

Commercial shipping offers a vast number of information challenges. Professionals have to constantly collect, piece together and interpret thousands of snippets of information every day to stay on-top of the global freight markets. The Signal Ocean Platform was born of a desire to improve the flow, fusion and analysis of such information to help professionals focus on achieving extraordinary performance.

Chairman of SSY, Mark Richardson, added “We are very excited about this new partnership, that enables us to focus on an area of shipping analytics that is fast becoming the differentiator for businesses. As part of our technology strategy, we recognise there is a growing need for cutting edge, data-driven technology in the shipbroking world. Signal Ocean already provides best-in-class solutions to the market and we are looking forward to working together to develop further innovations.”

Work is scheduled to begin immediately, while the first phase will focus on deploying, testing and fine-tuning the technology internally at SSY before engaging other interested parties.

Signal Ocean press contact

For further details, please contact Megan MacIver:
E: m.maciver@thesignalgroup.com

About Signal Ocean

Signal Ocean is the technology arm of The Signal Group, established in 2014 as a diversified shipping services group with offices in London and Athens. Its Business-to-Business (B2B) Software-as-a-Service (SaaS) product, The Signal Ocean Platform, allows charterers, brokers and shipowners to securely process, aggregate, analyse and interrogate a complex array of private and public shipping data. Powered by sophisticated machine learning and artificial intelligence technologies, the platform processes the available data to deliver customized, exclusive insights for smarter, faster and more-informed decision-making.

www.signalocean.com | www.thesignalgroup.com

Signal Ocean announces partnership with Simpson Spence Young (SSY) on dry bulk carrier technology… was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.

Just 15 days ago, a Suezmax fixed in the West made around $30K per day. Ten days ago, that number climbed to $55k per day and today, it has more than doubled to exceed $100k per day.

Today we’re seeing several factors that impact vessel availability: from major recent events in Saudi Arabia, sanctions, drydock preparations for IMO 2020, bad regional weather, and increased demand in Libya.

Whenever vessel supply drops every vessel counts! At Signal, we are obsessed with counting vessels accurately. The Signal Ocean Platform employs powerful algorithms to turn data into real-time views of vessel availability around the global spot markets. This allows any market player to make better, faster commercial decisions.

Take a look at the supply trend above for Suezmaxes in West Africa and the associated TCE per vessel generated by Signal Ocean. Supply has dropped dramatically in the last 10 days by around 60% for the same future loading window.

Check out the list below which shows freight rates and associated fixtures for VLCC’s loading in the U.S. Gulf and destined for the Far East over the last month.

When the TCE for one voyage starts looking like S&P prices, investing in technological solutions is a no-brainer for charterers, owners and brokers.

If you want to know more, please contact us to request a demo or call us at +302108928028

Every vessel counts! was originally published in The Signal Group on Medium, where people are continuing the conversation by highlighting and responding to this story.