The document summarizes tanker ordering activity in 2013. It notes that tanker orders so far this year have already exceeded the total for 2012. While orders are not as high as 2008 levels, they could reach 2010 levels. The majority of orders have been for smaller tankers, but VLCC orders from East Asia have also increased. Suezmax ordering has been limited due to oversupply concerns. MR2 ordering has dominated yards in recent years. The robust ordering is fueled by low asset prices but sustained overordering could further depress rates if fleet growth is not matched by deletions of older vessels.

1. Page 1
T a n k e r s
Industry Note
McQuilling Services, LLC.
Marine Transport Advisors
Ocean House ▪ 1035 Stewart Avenue ▪ Garden City, NY
T: +1.516.227.5700 ▪ F: +1.516.745.6198 ▪ services.us@mcquilling.com
www.mcquilling.com
While McQuilling Services has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling Services makes no warranties or representations as to
the accuracy of any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling Services assumes no liability or responsibility for any
errors or omissions in the content of this report. This report is copyrighted by McQuilling Services and no part may be copied or reproduced for commercial purposes without the
express written permission of McQuilling Services
No. 16–Retail Therapy
August 15, 2013
Regardless of the state of the global economy, the world
renowned Fifth Avenue in New York City is always
bustling with optimistic shoppers looking for some relief
through retail therapy. It appears that tanker owners,
despite the market’s ongoing doldrums, have taken the
same approach as they have certainly flexed their
checkbooks at shipyards this year.
Just take a look at the 2013 orderbook. Between January
and July there have been 165 orders placed for tankers
27,500 dwt and above. This is already in excess of the total
orderbook recorded in 2012 which was 158 vessels. At
present, it appears that 2013 figures are unlikely to reach
the robust levels of 2008, but 2010’s figure could be
possible (Figure 1). This activity has been somewhat
surprising, given the previous year’s high orders.
Figure 1 – Total Number of New Tanker Orders 2008-2013
YTD
Source: McQuilling Services
Some of this ordering activity can also be attributed to
asset values remaining low or continuing to fall this year,
presenting an opportunity to buyers with deep pockets or
access to financing. Despite the majority of activity
occurring in the smaller sized tankers, some market
participants recognize the value in the larger tankers as
well.
The VLCC sector has been recording an upward trend in
orders. Most of the orders have stemmed from players in
the Far East. There were 14 orders in 2011 and 13 in 2012
with year-to-date activity in 2013 at 16 thus far. However,
it appears unlikely that all of the VLCC orders will exit
yards, given the status of some owners and yards.
Suezmax ordering has been limited, with only a total of 4
orders thus far in 2013 compared to 2011 and 2012 when
the orders totaled 22 and 30, respectively (Figure 2).
However, given the surplus of Suezmax tonnage and their
increasing competition with VLCCs, these lower orders are
critical for future fleet fundamentals. Between the years
2009-2012, there was a net fleet growth of 115 Suezmax
vessels as compared to only 39 between the years 2001-
2008. Given these relatively strong numbers, concerns
regarding tonnage surplus is likely to remain. Further
pressure to demand has surfaced from rising US oil
production, which is reducing demand for West African
imports.
Figure 2 – Crude & Residual Product Tanker Orders 2011-
2013 YTD
Source: McQuilling Services
Aframax/LR2 sized vessel orders are also on the rise after
two years of relatively low contracting. In 2013, orders
have started to rebound with a total of 34 orders year-to-
0
50
100
150
200
250
300
350
2008
2009
2010
2011
2012
2013
# of New Tanker Orders
0
5
10
15
20
25
30
35
VLCC
SUEZ
AFRA
PANA
2011
2012
2013
# of New Tanker Orders

2. Page 2
T a n k e r s
Industry Note
McQuilling Services, LLC.
Marine Transport Advisors
Ocean House ▪ 1035 Stewart Avenue ▪ Garden City, NY
T: +1.516.227.5700 ▪ F: +1.516.745.6198 ▪ services.us@mcquilling.com
www.mcquilling.com
While McQuilling Services has used reasonable efforts to include accurate and up-to-date information in this report, McQuilling Services makes no warranties or representations as to
the accuracy of any information contained herein or accuracy or reasonableness of conclusions drawn there from. McQuilling Services assumes no liability or responsibility for any
errors or omissions in the content of this report. This report is copyrighted by McQuilling Services and no part may be copied or reproduced for commercial purposes without the
express written permission of McQuilling Services
No. 16–Retail Therapy
August 15, 2013
date, which could knock the projected balanced fleet
growth offline. Support for these sectors also stems from
port accessibility and the potential of these vessels to dirty
or clean up, if a coating is added. Additionally, the US oil
boom has provided some support for Jones Act tanker
ordering. Panamax and LR1 orders have continued to be
limited due to the fleet’s trade marginalization and there
has only been one order in 2013.
The sector that continues to dominate the available yard
slots in recent years are MR2s. Between 2011 and 2012,
orders have ballooned from 36 to 93 (Figure 3). The pace
has continued in 2013 and orders have thus far tallied 97.
In terms of ordering activity, two companies have
dominated the landscape, Sinokor and Scorpio Tankers.
Figure 3 – Clean Petroleum Product Tanker Orders 2011-
2013 YTD
Source: McQuilling Services
Our proprietary data shows that in 2011 and 2012 net fleet
growth in the MR2 sector was 30 vessels, whereas the 2013
forecast anticipates that the fleet will expand by 40 vessels,
highlighting the positive sentiment surrounding the tanker
class. MR1s are showing a similar trend to MR2s, but on a
much less dramatic level. Orders for MR1s in 2013 are at
13, already surpassing the previous two years’ total. Like
the MR2 sector, orders have been dominated by a
relatively narrow customer base.
The robust ordering activity in 2013 has been fueled by
low asset rates and owners with healthy balance sheets
having the opportunity to snatch bargain basement prices.
However, given our assessment in our recently published
2013 Mid-Year Update, showing that vessel deletions are
far below expectations, owners must continue to trim their
fleets in order to compensate for current and previous
year’s orderbooks. If this does not occur and spot rates
remain depressed, vessel values will not rebound. Vessel’s
in the range of 20 years or older should be a prime
candidate for deletion on the grounds of technical
restrictions and vetting requirements. Although some of
these older vessels are likely to be free of financing costs,
slashing tonnage availability may be the only way to help
rates rebound and increase earnings in the face of tepid
demand.
When it comes to retail therapy, there is always the risk of
the patient coming down with a case of buyer’s remorse.
Today’s shipping market will not offer immediate
satisfaction, unlike making a purchase on New York’s
Fifth Avenue. It is much easier to return a pair of shoes
than discard an oil tanker, meaning that market
participants should step into orders with caution.
0
20
40
60
80
100
120
LR2
LR1
MR2
MR1
2011
2012
2013
# of New Tanker Orders