Tanker Rate Hike from Hurricane Aftermath Short-Lived
The spike in freight rates for product tankers in the aftermath of the Hurricane Harvey is expected to be short-lived.
Product tankers saw a 35-40 percent lift in spot rates since the hurricane made landfall on Texas on August 25, shutting down refineries.
The tanker industry is taking advantage from the initial uncertainty caused by the hurricane’s impact, however, the freight rate increase will be a short-term thing, as explained by BIMCO’s Chief Analyst Peter Sand.
It is projected that it will take from two to four weeks for the oil refineries in Texas to resume operations, providing a window of opportunity for owners to avail of the market uncertainty and find work for their available tonnage.
According to Sand, owners with open tonnage in the Atlantic Basin should be able to benefit from this situation.
“Although freight rates significantly increased on the back of the tropical storm, by Friday 1st Sept, when ports started to partly operate again, rates had leveled off but were still very satisfying,” Intermodal Shipbrokers said in a weekly report.
Based on the latest update from the US Energy Department from September 10, five refineries in the Gulf Coast region were shut down, while six refineries are in the process of restarting operations, which may take up to several weeks, depending on whether any damage is found during restart.
What is more, fuel shortage stemming from the natural disaster has prompted the Secretary of Homeland Security to waive the Jones Act requirements for shipping fuel to Florida, as reported by White House Homeland Security Adviser Tom Bossert.
This will allow foreign flag vessels to bring in fuel to help with fuel shortages amid the recovery from Hurricane Irma in Florida.
Ports in eight port sectors in the Caribbean, Florida, North Carolina, and South Caroline are either closed or open with restrictions.
World Maritime News Staff