German Tanker Shipping loses core Russian cargoes as uncertainty over sanctions bites

German Tanker Shipping is expecting to keep its fleet in action despite losing the Russian cargoes that have been the mainstay of its business.

Managing partner Frank Jungmann told TradeWinds that since the beginning of the Russian invasion of Ukraine, his company has faced protests at German and British discharge ports, but none that have had a significant impact on deliveries.

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But the unpredictable effect of trading sanctions is a greater challenge.

The Bremen-based product tanker owner runs a 15-ship fleet, including 10 MR tankers of its own plus the five-ship fleet of Seychelles Petroleum Co. All but two of the 15 vessels have been trading products almost exclusively from St Petersburg, Ust-Luga and Primorsk, according to AIS data covering recent months.

The company remains in the business of trading Russian Baltic cargoes but expects that business to dry up.

“I think in the future we will see not so many cargoes from the Baltic to western Europe. This is only my expectation,” Jungmann told TradeWinds.

Black Sea trading is unthinkable for now, despite the risk premium available for the business. “We don’t go into a restricted situation,” he said.

But losing the company’s anchor Russian Baltic business does not imply walking away from anything especially lucrative.

“There is no risk premium for the Baltic,” he said.

German Tanker Shipping controls 14 MR product tankers, plus one small tanker distributing refined products in the Seychelles.

AIS data shows that nine of its vessels have been distributing Russian cargoes to destinations from the Baltic to Spain. Four more Seychelles ships have been ranging further afield, carrying the same Russian products to European and North American discharge ports.

Of the two remaining tankers the company controls, the 32,500-dwt Seahake (built 2003) has been trading in the eastern Mediterranean and one small tanker, the 1,800-dwt Seychelles Paradise (built 2009), sticks close to home in the Indian Ocean.

Despite the centrality of Russian cargoes to his current business, Jungmann played down the difficulty of replacing them.

“There are a lot of other cargoes in northern Europe,” he said. “Worldwide, do you know how many tankers there are? Let’s say maybe 12,000 tankers and maybe 2,500 MR product tankers. We only have 15 of them.”

Jungmann said his company books a roughly even mix of contracts of affreightment, time charter and spot business, with customers including a mixture of traders and refiners.

“We may have one idle ship right now, but I think we will fix it today,” he told TradeWinds.

German Tanker Shipping faced two protests shortly after the beginning of hostilities in Ukraine.

Dockers in Liverpool, north-western England, were unwilling to work the 40,600-dwt Seacod (built 2006). Then on 7 March, closer to home, a German Greenpeace boat blocked the Weser River and team members painted the slogan “Peace Not Oil” on the hull of the 40,600-dwt Seasprat (built 2006).

Jungmann said protests are impossible to predict, and uncertainty is what his company faces in its Russian-based trading.

“Nobody knows what will be the next sanction, and nobody knows the impact of the embargoes on Russian cargoes,” he said.