Please enable JavaScript.
Coggle requires JavaScript to display documents.
Navigating Global Challenges: Financial Efficiency for AET Tanker -…
Navigating Global Challenges:
Financial Efficiency for AET Tanker
Company's Services/Products
Type of Vessels
Total of 67 vessels
13 x VLCC
17 x DPST
26 x Aframax
2 x LR2
8 x LSV
6 x Suezmax
Find out the following:
age of vessels
how many vessels are already using clean fuels
Company's Solutions
Ship-to- ship Lightering
Dynamic Positioning Shuttle Tankers
Conventional Shipping
Dual Fuel Tankers
Modular Capture Vessels
Global Problem (direct)
Geopolitical tensions
(particularly in Middle East)
Why does this matter?
From an article by 'Business Insider Africa', which talks about the Top 10 most important crude oil shipping routes that power global trade, 3 of the routes are located in the middle east. That being, the Straits of Hormuz, Suez Canal and the Bad el-Mandeb Strait.
With tensions rising in the middle east and the possibility of escalations involving military attacks, it could lead to shipping routes being shut down due to the dangers. An example would be the 'Red Sea Crisis' where Houthi attacks on ships ships in the Red Sea have caused many shipping companies to reroute vessels around the Cape of Good Hope, significantly increasing travel time and costs.
Straits of Hormuz
About 20% of global oil and gas flows through this narrow shipping lane in the Gulf. Blocking it would have profound consequences for the global economy, disrupting international trade and ratcheting up oil prices.
It could also inflate the cost of goods and services worldwide, and hit some of the world's biggest economies, including China, India and Japan, which are among the top importers of crude oil passing through the strait.
The conflict in the middle east involves Iran and they possess the world's fourth-largest proven oil reserves, holding approximately 209 billion barrels of crude oil. This represents about 12% of the global total and 24% of the Middle East's reserves, according to the U.S. Energy Information Administration (EIA).
This could lead to disruption in oil supply routes. A conflict which involves Iran could lead to blockades, detours or increasing insurance premium for war risks.
This could also lead to volatility in oil prices. Instability in the middle east may cause spikes in oil prices due to supply fears. This could have both positive and negative effects for AET Tanker where higher oil prices may boost demand for tankers or increase spot charter rates. However, prolonged conflict and disruption may impact oil production and trade flow, leading to reduced shipping demand.
Quoted from an article by 'The Business Times', "Even if there is a disruption, Organization of the Petroleum Exporting Countries (Opec+) members Saudi Arabia and the United Arab Emirates have significant spare capacity that could be brought on to potentially help cool prices."
Main VLCC routes: TD1 (Middle East-to-US Gulf), TD3C (Middle East-to-China), TD15 (West Africa-to-China), TD22 (US Gulf-to-China), South America East Coast-to-China as well as TD25 (US Gulf-to-Europe)
Company's Goals
40% GHG emissions reduction
Decarbonisation
Find out how AET monitors carbon emissions
50% Increase in Cashflow from Operations (CFO)
Profitable New Energy
Operational efficiency study:
Identify potential voyage planning inefficiencies (e.g. idle times)
Lower OPEX which improves cash flow
Fleet Utilization Optimization:
Analyze current utilization rates for different vessel class
Propose optimized deployment strategies
(VLCC for long haul etc.)
Company's Customers
National Oil Companies
be more specific
Traders
International Oil Companies
Refiners
Industry's Risk
Charter Rate Fluctuations
There are 2 main types of charters, Spot & Time charter
Spot Charters: One-time agreement where a tanker is hired to transport cargo.
Short-term, single voyage, rate paid is called 'spot rate' and it fluctuates daily based on market demand and supply of ships
Time charters: Charterer hires a tanker for a set period of time (e.g., 6 months,1 year, or longer).
Owner provides the ship and crew, but charterer decides where the ship goes.
Charterer pays a daily rate.
How tanker companies make money from time charters:
They earn a daily hire rate, regardless of how the ship is used.
The charterer pays for fuel, port charges, etc.
This gives the shipowner more predictable cash flow and reduces exposure to market volatility.
If the charter rate is above the owner's breakeven cost, it’s profitable.
How tanker companies make use of both Spot and Time Charter contracts:
Many tanker companies balance both contracts as,
Spot charters capitalizes on high rates during peak demand
Time charters to lock in stable revenue during uncertain periods
Find out about AET Tanker's current contract terms and see if any changes can be made to secure better terms etc.
How tanker companies can make money from Spot Charters:
They earn a lump sum or freight rate per ton of cargo.
Profit = Freight revenue - Voyage expenses (fuel, port charges)
Company's Challenges/Issues
Keeping up with industry shift towards greener shipping
High risk of older vessels not being able to meet regulations
Operational and safety risks:
Accidents, Oil spills, Mechanical failures, Crew errors
Could lead to financial and reputational repercussions
Impacts of ongoing tariffs implemented by USA:
Vessel-based fees on Chinese-built or Operated ships
Under U.S. Section 301 tariff proposals, foreign fleets—including tankers—could face port entry fees of $50–$140 per net ton (NT), plus possible flat fees of up to $1.5 million per call, depending on whether vessels are Chinese-built or operated
AET’s risk: If any of its vessels are Chinese-built or operated—or if they enter U.S. ports in combination fleets—they may incur additional costs, which charterers may demand be passed through.
With the tariffs on Chinese-built ships, it may lead to companies finding alternative countries for shipbuilding which may increase shipbuilding costs
Due to further uncertainty on the tariffs that are going to be implemented, this could lead to charter contract uncertainty as oil traders may look to avoid long-term charter agreements, leading to volatility in the Spot markets.
US tariffs may redirect trade from one country to another
e.g. USA tariffs on Venezuelan crude leads to an increased demand for Brazilian crude
Find out where AET Tanker gets their crude oil from and see if the country is impacted by US tariffs
QUESTIONS TO ASK AET TANKER:
What is the age profile of AET Tanker's fleet? (Distinguish between newer & older vessels)
What is the price range AET Tanker usually pays for oil?
What is AET Tanker's Spot Market terms?
How many of AET Tanker's vessels currently operate on clean fuels?
-If AET Tanker is currently not using clean fuels for their vessel, do they have plans to adopt them in future?
Are any of their vessels built it or operate in China?
How does AET Tanker monitor and track their carbon emissions?
What is AET Tanker's present vessel routes?
Are any of their vessel routes facing disruptions at the moment? and if so, what are the impacts of the detours?