The world maritime community has experienced many difficult commercial and operational challenges over the years, but nothing compares with the enormity or the scope experienced since spring 2019, with no immediate end in sight. The confluence of a series of epoch-making market disruptions—some planned and some not, and much to the industry’s agony—has been without parallel in recent history. While some transformational changes, such as the mandated transition to the new 2020 International Maritime Organization (IMO) low-sulfur fuel oil rule or a recalcitrant Brexit finale, were expected, the industry could not anticipated another tanker war off the Strait of Hormuz or the more recent crude oil price collapse. In addition, the outbreak of COVID-19 has had a crippling effect on shipping markets, just as they were attempting to fend off the aftereffects of U.S. trade sanctions and a decelerating Chinese economy.
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1. As per Clarksons, 31 VLCCs were recycled in 2019, the largest number since 2002. See, “The Spike in Oil-Tanker Rates May Be Over, But a Boom Is Coming,” Bloomberg News, 13 November 2019.
2. It is on the ascent again, fueled by the price war between Saudi Arabia and Russia that began in early March 2020; many older, large tankers are being used for storing crude oil in anticipation of higher future price.
3. As per Drewry Statistics, liner operators canceled as many as 253 east-west sailings (compared to 145 cancellations in 2018), owing to lack of demand.
4. Sealift-qualified mariners meet all domestic and international requirements to operate ships of the size used for sealift. In addition, they hold a current security clearance, a valid Transportation Worker Identification Credential, and the U.S. Coast Guard medical certificate and have sailed at least once within the past 18 months.
5. The actual requirement in a major war will be much higher than the publicly estimated 80-plus tankers.
6. The four goals stated in the 2020 MARGO Report to Congress include strengthening U.S. maritime capabilities essential to national security and economic prosperity; ensuring the availability of a U.S. maritime workforce that will support the sealift resource needs of the National Security Strategy; supporting enhancement of the U.S. port infrastructure and performance; and driving maritime innovation in information, automation, safety, environmental impact, and other areas.
