Overview of the

Tanker Industry

Prof. Loveraj Takru

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 History of Tanker Development

• 1861 – The first cargo of oil brought to England across

the Atlantic on the Elizabeth Watts
• Oil was carried in barrels on board as general cargo
• End of 19th century mineral oil increased in importance,
transportation was a problem
• 1886 – First tanker Gluckauf was built using the hull as
the container
• Major change in tanker design was the T2 tanker built in
USA during WW II

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• 1958 – 100,000 tons size barrier broken
• 1966 – 200,000 tons size barrier broken
• 1967 – Closure of Suez Canal caused dramatic increase
in ship sizes
• 1989 – Exxon Valdez spill in Alaska caused design
change to double hulls and USA brings in OPA 90

1886 2,300 tons

1918 8,000 tons
1930 10,000 tons
1950 16,000 tons
1956 47,750 tons
1968 327,000 tons
1979 564,763 tons 458.45 m x 24.6 m
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Types of Tankers – Based on Cargo Carried

• Crude Tankers
• Product Tankers
• Oil/Bulk/Ore Carriers (OBO’s)
• Chemical Tankers
o Chemicals
o Edible Oils etc
• Liquefied Gas Carriers
o LNG – minus 160 deg C
o LPG – minus 50 deg C

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Miscellaneous Dedicated Tankers
• Phosphoric Acid Carriers – These carry phosphoric acid
and are specially designed with stainless steel tanks,
pumps and lines.
• Fruit Juice Carriers – Ships around 10,000 tons dwt and
carry juices at temperatures below zero
• Molten Sulphur Carriers – Here the cargo is carried at
about 135 deg C.
• Bunkering Ships – These vessels supply various types
of fuel to ships.
• Shuttle Tankers – Essentially crude tankers which
specialize in the loading of crude oil from oil fields.
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Tanker Size Classification

• ULCC, double hull 350,000 dwt plus

• ULCC, single hull 320,000 dwt plus
• VLCC, double hull 200,000–349,999 dwt
• VLCC, single hull 200,000–319,999 dwt
• Suezmax crude tanker 125,000–199,999 dwt
• Aframax crude tanker 80,000– 124,999 dwt
• Panamax crude tanker 50,000– 79,999 dwt
• Handysize tankers < 50,000 dwt

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Shipments in 2010

• Crude oil shipments reached about 1.8 billion tons, a

4.3 per cent increase over 2009

• Petroleum products increased by 3.7 per cent in 2010,

taking the total to 967.5 million tons

• LNG shipments increased by over 22 per cent to

reach 297.6 bcm

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Operational Issues on Tankers
• Cargo Operations
• Loading
• Discharging
• Segregation
• Tank Washing
• Crude Oil Washing
• Cargo Heating
• Safety Issues
• Pollution - MARPOL

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Commercial Aspects of Tanker Operations
Main modes of Charters – Main basis being separation
of costs between ship owner and charterer

• Time Charters
• Voyage Charters
• Contracts of Affreightment
• Bareboat Charters

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Tanker Freight Rate Mechanism

• Freight Schedule Called New Worldscale

• Based on standard returns on standard ship sizes
• Originated during the 1939-1945 war
• Standard revenues on all voyages
• Between 1952 and 1962 number of different schedules
issued by non-governmental bodies: Scales Nos. 1, 2
and 3 and then Intascale in London, ATRS in New
York.
• In 1969 joint London/New York production issued to
replace both Intascale and ATRS with "Worldwide
Tanker Nominal Freight Scale“ - "Worldscale".
• "New Worldscale“ introduced wef 1st January 1989 12
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REQUIRED FREIGHT LEVELS VESSEL SIZE 85,000 DWT

REQUIRED FREIGHT LEVELS VESSEL SIZE 280,000 DWT

REQUIRED FREIGHT LEVELS VESSEL SIZE 350,000 DWT

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APPLICATION OF DIFFERENTIALS
FIXED RATE DIFFERENTIALS

Fixed Rate Differentials are to be included as part of the freight payment as a fixed
amount in respect of costs incurred by Owners. Such differentials are not subject to
any percentage variation which the contracting parties have agreed to apply to
Worldscale rates. - canal dues, Rotterdam Harbour dues, many charges based on
the quantity of cargo worked and the P&I costs associated with the U.S.A. Oil
Pollution Act provisions

Main Fixed Differentials are on account of:

Suez Canal Transit

Panama Canal Transit

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VARIABLE RATE DIFFERENTIALS
Variable Rate Differentials are to be added to or deducted from, as specified, the
applicable rate of freight. Such variable rate differentials are subject to the
percentage variation which the contracting parties have agreed to apply to
Worldscale rates

6. FUNAKAWA (Japan) he published rates are based upon Akita Power

Station). When cargo is loaded or discharged at the Funakawa Stockpiling
Terminal, an addition of USD 1.01 must be made to the Funakawa rate
applicable to the voyage in question.
7. HUELVA (Spain) (The published rates are based upon berths other than the
CEPSA SMB). When cargo is loaded or discharged at the CEPSA SMB, a
deduction of USD 0.36 must be made to the Huelva rate applicable to the
voyage in question.
8. JAMNAGAR (India) (The published rates are based upon berths other than
the Jamnagar SPM terminals). When cargo is loaded or discharged at the
Jamnagar SPM Terminal, an addition of USD 0.50 must be made to the
Jamnagar rate applicable to the voyage in question.
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