A combination of new decarbonisation regulations and an ageing chemical tanker fleet has the potential to seriously improve prospects for owners, according to Norway's Odfjell.

Chief executive Kristian Morch told analysts on a conference call that many operators have not yet woken up to the requirements of the International Maritime Organization's Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator entering into force in 2023.

"A big part of the fleet may be starting to slow-steam in 2023, which a lot of people will have to do because they simply have not invested enough in energy-saving devices," he said.

"If we twist our supply story to take another 10% or 20% out of ... capacity, then our utilisation models show a fairly interesting perspective."

This is a tonnage supply situation that "will be real", and not only for chemical carriers, Morch told the call.

Time to wake up

"Many people have not woken up to the fact that they have to start buying carbon credits when they trade in the EU," he said.

"They have not really understood what they need to do to become compliant, something that could be a positive element in the supply side."

The Odfjell boss said there have been virtually no newbuilding orders placed in the chemical sector, and virtually no new ships are being delivered.

Meanwhile, an increasing number of the global fleet is reaching the end of its life.

Easing into retirement

What happens after the next three or four years is 'anyone's guess', Kristian Morch says. Photo: Gunnar Eide/Odfjell

Odfjell calculates that 5m dwt of capacity is over 20 years of age, out of a fleet of 31m dwt.

And Morch said 1.2m dwt of the core fleet has left chemical trades over the past 18 months, going into "retirement" trades.

Over the next two years, close to a further 1m dwt of ships will be more than 25 years old, "which makes them more or less impossible to trade in the main trades", he added.

But the longer term remains harder to predict.

While Odfjell has a clear understanding of the supply side over the next three or four years, "what happens after that is anyone's guess", Morch said.

"Will we have a big influx of new orders, with the uncertainty we have on new technology and decarbonisation?" he wondered.

The CEO believes new orders will probably take a little longer to emerge, so the supply side is under control for the coming period.

The company's net loss in the third quarter was $25.3m, as it booked a $21m impairment from selling the last three shortsea tankers it operated in Asia.

This compares with a profit of $3.9m a year ago.

In the three months ending 30 September, the shipowner renewed only a minor part of its contract of affreightment portfolio, but at an average rate increase of 5%.

COA coverage reached 51% in the period, up from 50% three months earlier.