Taking Stock of Crude Tankers: A Look at Five Companies
Vessel age
In this article, we’ll compare the average fleet age of crude tanker companies. Also, we’ll see if any company’s fleet may be due for some scrapping.
Vessel age can affect a crude tanker company’s vessel operating costs, capital expenditure plans, and future earnings capacity. Generally speaking, older vessels are less fuel efficient and costlier to maintain. Insurance rates also increase with the age of the vessel, which increases the vessel’s operating cost for the company. On the other hand, the capital tied up in an older ship is generally less and an older ship is paid no less for transporting oil than a new ship.
How we calculate average age?
We’ve taken the sum of the ages of all existing vessels in the fleet and divided that by the number of vessels in the fleet. The age of the vessel is calculated according to its build year. Also, we didn’t consider newbuild vessels that will be entering the company’s fleet. With this methodology, the average age mentioned by the company may slightly differ from our calculation.
Average fleet age comparison
Nordic American Tankers (NAT) has the highest average fleet age of 13.2 years, followed by DHT Holdings (DHT), which has an average fleet age of 9.7 years. Teekay Tankers (TNK) has the lowest fleet age of 7.6 years. Tsakos Energy Navigation’s (TNP) and Euronav’s (EURN) average fleet ages are 8.8 years and 8.1 years, respectively.
Possibilities of scrapping
A crude tanker normally has a lifespan of 25 years. Though Nordic American Tankers has one of the oldest fleets, none of its vessels are above 20 years old. Similarly, none of the aforementioned tanker companies own vessels above 20 years of age.
Therefore, none of these companies face the immediate risk of vessel scrapping. Investors interested in broader exposure to the industrials sector can invest in the SPDR Dow Jones Industrial Average ETF (DIA).
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