About the Author:
Wong Hong Lee is the Managing Director of Sovereign Shipping Global Pte Ltd. The company’s primary focus is on Sales and Purchase (SNP) shipbroking and projects in South East Asia.
Lee has more than 25 years of varied experience in the shipping industry and 15 years in SNP. He started his career as a Marine Engineer and surveyor before moving into the shipbroking field. He has worked for and held management positions at some of Singapore’s major companies, including Island Shipbrokers. His technical skills and commercial experience provides him the prowess to offer high standards of shipbroking services to his clients. Hong Lee graduated from University of Newcastle-Upon-Tyne, UK with a first class honours degree in Naval Architecture and Marine Engineering and is an active community leader in Singapore.
Bunker tankers and conventional oil tankers have largely similar tasks – which is to carry oil products from point A (loading) to point B (discharging). Stakeholders are often curious of the difference between these two types of vessels. After all, on top of the similar job task, they seem to have the same appearance too.
However, within the bunker tanker hull is a very different type of vessel when compared to the conventional oil tanker and more often than not, at a price premium of 20% to 30%.
When I explain the difference to clients, I like to use the analogy of a marathon runner and a sprinter. The conventional oil tanker is more like a marathon runner whereas the bunker tanker behaves similar to a sprinter.
Assuming you have similar sized oil and bunker tankers carrying 6,000 mt of fuel. The oil tanker would take a few days to transport this whole parcel from Singapore to Myanmar. However during the same time, the bunker tanker operating within Singapore waters would have made multiple deliveries and probably replenished its tanks with more cargo!
It is similar to the taxi driver who prefers to make multiple short trips, as the combined fares would be more than one long trip. The more times a bunker tanker can load, the more it is able to discharge and earn from the freight and operations.
From the technical perspective, in order to handle more cargo turns, bunker tankers are equipped with more robust equipment. Using my analogy again, the main cargo pump is like the hands and legs of the sprinter, and the heart – the main engine. If these are not well tuned and efficient, you cannot expect the vessel to perform.
Furthermore, bunker tankers are purpose built vessels with twin-screw bow thrusters for manoeuvrability and have an open deck design for crew safety. There are also stringent and specific equipment configuration requirements for Singapore-registered bunker tankers to fulfil, such as to accomplish the required pumping rate and not forgetting, mass flow metering systems.
In spite of their higher prices, shipowners and operators should not be deterred from considering newbuild bunker tankers. Requirements from first class charterers – such as oil majors who prioritise safety, efficiency and environmental consciousness, ensure continued demand for bunker tankers and this is also what’s trending in the sale & purchase (SNP) market.
The current downturn of the shipbuilding sector means that now is the best time to secure a good quality ship from a reputable shipyard with bunker tanker construction experience and at a very reasonable price. Shipyards are hungry for newbuild orders and are less hesitant in securing bunker tankers of 3,000 to 8,000 DWT, compared with favouring bigger projects previously. The cost of newbuilds at second tier yards are even more favourable.
To sweeten the deal, shipyards go beyond shipbuilding to offer assistance to shipowners to secure financing, subject to the company’s reputation. As long as there is a valid business model, there is no reason for players to shy away from building new bunker tankers.
