John Fredriksen’s Frontline said a jump in fuel costs may spur owners to sail vessels more slowly to conserve energy while at the same time shrinking fleet supply and bolstering charter rates, according to Bloomberg.
The company and “several major owners” sailed 20% slower than normal toward the end of last year after `’low’’ demand and record fuel costs hurt margins, according to a May 2 regulatory filing from the company. That cut fleet capacity by about 10% and was followed by the biggest two-month gain in freight rates in November and December for at least 16 years.
The possibility of slowing is “soon again emerging,” said Jens Martin Jensen (pictured) , the interim Chief Executive Officer of Frontline’s management unit. “I believe all owners, including ourselves, are monitoring this on a daily basis.”
Tanker owners trimmed about $20,000 from their daily fuel costs by slowing down last year, the May 2 filing said.
Fuel now represents about 85% of daily costs, Jensen said. Frontline and its competitors sailed at about 12 knots last year, compared with 15 knots normally, according to the filing.