Finding Strength in Numbers

Even though the industry may have been busy on this week’s holiday party circuit, news suggests that business is still getting done between the networking and canapés. It was announced on Tuesday that Mitsui OSK Lines / Phoenix Tankers, AP Moller, SAMCO and Ocean Tankers have signed a letter of intent to form a new tanker pool. While the deal has yet to be finalized, this new pool is expected to begin operation in February 2012 and control a combined fleet of around 50 VLCC tankers by the end of next year. Economies of scale and increased market presence achievable through pooling have helped companies reduce costs, streamline operations, and improve information flow, three significant advantages in these troubled markets. While some speculate that further consolidation of the VLCC market is a bullish signal for freight rates, strength in numbers is not likely to be a quick fix against flabby fundamentals. Download here