Tanker freight rates up

The current spot freight rates in the key tanker segment are considerably lower on a year-on-year basis, but have shown signs of improvement on a sequential basis.

In the VLCC (very large crude carriers) segment, the spot freight rates are around $19,000 a day compared with the average spot freight rate of $15,226 in the quarter ended September 30, 2007.

The average spot rates in the segment were hovering close to the $33,000-level in November last year. VLCCs are used to transport crude oil from west Asia to refiners in the western countries.

Indian shipping companies typically have long-term contracts with their key customers in a bid to offset the sluggish trend (on a y-o-y basis) in the spot freight market.

Sources in the shipping industry said refiners in western countries appear to have fully used their oil inventories, and are now contracting large vessels to transport crude from west Asia to their refineries.

In the Suezmax segment, spot freight rates are at $15,700 region compared with the average spot rate of $14,099 in the September quarter and $31,400 levels in November 2006.

On the other hand, freight rates in the dry-bulk segment continue to remain strong, thanks to strong demand, especially from the Chinese metals industry. The Baltic Dry Index is currently at 10,938 compared with 4,134 a year ago.

Meanwhile, GE Shipping's operating profit margin declined 465 basis points y-o-y to 46.2 per cent in the last quarter due to higher operational costs.