‘Shipbuilders’ ‘a huge risk’, says Idr Olympic Shipping. Onassis

By George George

The president and CEO of Olympic Shipping, which manages the ships controlled by the Onassis Foundation, George Karageorgiou, characterizes the construction of new crude oil tankers as a “huge risk”.

Speaking to Capital.gr, on the occasion of two charters secured by the company, Mr. Karageorgiou stands by the uncertainty that prevails in the shipping market for the fuels, regulations and technologies of the future. As he explains, the risk of a ship being built today becoming “obsolete” within the next ten years of its life is particularly high.

Of course, the “explosive” rise in prices this year and the extension of delivery times by shipyards is a deterrent to ordering new tonnage.

For example, ordering a super tanker (VLCC) in South Korea costs about $ 110 million. At the same time, according to Mr. Karageorgiou, if a shipowner orders two or more tankers today, then he will receive the first one in the fourth quarter of 2024, while the rest in 2025. The time between ordering and delivery is currently 3-4 years , a period during which changes in regulations and technology will be rapid.

When will the freight market recover?

Regarding the current situation, Mr. Karageorgiou explains that the fares for tankers are low, because there is an overabundance of steamers and a relatively small number of cargo. Indicatively, the number of oil cargoes to be transported has not yet recovered to the levels of 2019, while the capacity of the fleet of crude oil tankers has increased by about 6%, compared to two years ago.

In this context and given what has been said above about shipbuilding, he adds that if ship orders increase further, the fleet will continue to grow, without being sure that future demand will be commensurate. This is because no one knows whether oil will retain the role it currently plays in international trade, due to growing pressure to eliminate fossil fuels.

However, Mr. Karageorgiou does not share the optimism of other shipowners for a significant improvement in the market directly and estimates that the crude oil tankers industry will recover if 1) the number of ships sold in scrap yards increases and 2) there are no unpleasant developments with the pandemic which will negatively affect demand. With today’s data, it places the recovery in the second half of 2022, without, however, as it says to record the impressive numbers that the market saw in March 2020.

Mr. Karageorgiou is very optimistic about the period 2023-24, as he believes that the new environmental regulations that will enter into force in 2023 will significantly reduce the cruising speed of the global fleet and at the same time will make many of the older ships unsustainable, thus reducing noticeably toned offer.

Two charters

In this difficult environment, Olympic Shipping succeeds and provides employment for the ships of the fleet. The VLCC “Olympic Luna” (capacity 299,337 dwt and built in 2017) was chartered for a period of 4.5 to 7 months, with the price being just over $ 27,000 per day. At the same time, the suezmax “Olympic Fighter” (capacity 158,871 dwt and built in 2017) “locked” in charter for a period of 5 to 7 months, for about $ 26,000 per day.

Ship brokers report that one-year charters for modern low-consumption VLCCs now close at $ 28,500 a day and for suezmaxes $ 18,500 a day. In general, after the upward trend in October, the freight market remains sluggish until November, while the smaller gains are more profitable.

Older ships for sale

Olympic Shipping seeks to maintain a young fleet. In this direction, the company’s goal is to sell ships that are over 16 years old.

A few months ago, brokers had linked the company to the VLCC “Olympic Legend” concession (capacity 309,270 dwt and built in 2003). A “look” at the shipping fleet shows that it has three more ships, which meet the specifications it sets for sales.

These are the suezmaxes “Olympic Flag”, “Olympic Future” and the VLCC “Olympic Loyalty II”. The first two were built in 2004 and the third was built in 2005.

Olympic Shipping is the continuation of Olympic Maritime, which was founded in 1952 in Paris by Aristotle Onassis. Based on the Equasis data platform, it currently manages 19 tankers.

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