Jones Act Product Tanker Outlook

Bind the hands of time back about three years and the Jones Act recipe sounded tasty; add one part Oil Pollution Act of 1990 (OPA) with its mandated phase-out of existing single-hulled vessels between 1995 and 2015, sprinkle in an aggressive marketing effort by the shipyards who were interested in developing commercial contracts, add a dash of US Maritime Administration’s Title XI financing program and sit back and wait for rates to go sky high. And wait. And wait. And wait.

What was missing from the Jones Act recipe was one important ingredient – demand.

While the strategy of capitalizing on the short supply of qualified vessels may have inspired a number of newbuilding orders, shipowners anticipated neither the impact of diminished demand for this new tonnage nor the precise dates when vessel supply would be reduced. Since 1994, rates have held at about $20,000-$22,000 for term charters of steam tankers while the spot market has recently dipped down as low as $15,000 a day.

This is only an excerpt of Jones Act Product Tanker Outlook

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