Why Product Tankers Needs to be segregated from Chemical Tankers Order Book

It is widely known that it is difficult to segregate the order book between chemical tankers and product tankers because nowadays there are a lot of product tankers in the market that have the resemblance of chemical tankers and due to the fact that there are a lot of products tankers which have been classified as IMO II/III notation (a characteristic applied only to chemical tankers), it makes the job even more difficult for many analysts. Many analysts have come up with many ways to overcome these overlapping data with no avail as they do not have the grasp of the difference between the two.

The secret to this is simple. To segregate the two types of tankers, it seems one has to dive deeper and do more due diligence than just merely looking at the data of the order book from a piece of paper because it can be really misleading. This is important because one would make a mistake of overestimating the amount of order book of chemical tankers while underreporting the order book of product tankers. The affect is obvious. It can affect the level of tanker rates of both tanker sub-industries whereby it can have an un-necessary negative effect to chemical tanker industry while one can have a mistaken believe of potential tanker rate increase for product tankers taking into account lower order book for this type of tanker worldwide.

This will have a more profound affect if one takes into consideration the shipyards producing chemical tankers and may lead to the assumption that there are more chemical tanker producers than product tankers’. While product tankers are relatively more difficult to build then a dry bulk, shipyards producing chemical tankers arguably tend to be more experience tanker builder than product tankers due to the more complicated nature of chemical ships than product. Some shipyards producing chemical tankers do not produce other type of tankers to maintain their niche and specialty.

This can be a more pressing issue if we look at the type of cargoes carried by each type of tankers. They are quite different in which product tankers tend to carry more general products and therefore commoditized such as gas oil, diesel oil, lube oil etc while chemical tankers tend to carry more specialized products and more value-added products such as petrochemicals, organics, in-organics, vegetable oil etc. The case of Dow sued Odfjell and other chemical carriers in 2003 for oligopoly charges in chemical transportation highlight the specific nature and high barriers to entry for this chemical segment and underlined the very nature of uniqueness of chemical transportation as opposed to product tankers. Such case will never happen in more crowded product tanker segments.