Medium range tanker business assessment
Client: A leading jet fuel trader
A leading jet fuel trader was considering acquiring medium range (MR) clean petroleum product tankers. The vessels were to be primarily used to carry the company’s jet cargo from North East Asia to China. The main aim was to ensure stable supply chain, hedge against freight rate volatility and carry third party cargo.
- To review market fundamentals for the MR tanker market.
- Assess the attractiveness and risks of different business models ie. JV partnership vs sole proprietorship.
- Assist in the decision making of newbuild vs second hand vessels.
- Build a robust financial model.
- Initially Drewry carried out an assessment of current and future MR tanker market fundamentals including demand vs supply, earnings, asset prices etc.
- Various shipping procurement models used by oil exporters/traders were then assessed (e.g. Spot, contract of affreightment, long term contracts, ship ownership, leasing).
- A relative attractiveness analysis was then completed for newbuild vs second hand ships in international trade and the specific trade lanes of the companies under consideration.
- Finally an analysis was completed as to whether the company should establish a fully owned subsidiary or joint venture with an existing shipping company giving consideration to all commercial and technical aspects of ship management.
- Based on our analysis and final report the company began preparations to launch a new shipping company, though internal processes delayed the final outcome.