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IMO regulation on Ballast Water Management[ds_preview] to trigger further scrapping activity in tanker shipping market, according to shipping consultancy Drewry.

Weakness in freight rates will increase tanker shipping demolitions over the next two years, with the trend accelerating in later years as a result of the IMO regulation on ballast water, according to the latest edition of the Tanker Forecaster, published by global shipping consultancy Drewry.

pr_tank_161116-kopieDespite the recent decline in tanker freight rates, demolitions have not yet picked up. Scrapping is expected to increase in the next two years, once owners start feeling the heat of persistent low freight rates. But as the fleet is relatively young, demolitions will be moderate, say Drewry.

The new International Maritime Organisation (IMO) regulation on Ballast Water Management will require that all vessels going into deep sea have in-built Ballast Water Treatment Systems (BWTS) by September 2017. Existing vessels will have a grace period to carry out the retro-fit during their next special survey if this occurs after the deadline.

»Since the tanker market will be oversupplied, older vessels will find it difficult to get employment«
Rajesh Verma, Drewry’s lead analyst for tanker shipping

Some owners are expected to bring forward fourth special surveys, if they fall around the scheduled deadline, in order to delay retrofitting BWTS to the fifth special survey. But vessel owners for which the survey is due after mid-2018 will probably have to either retro-fit BWTS or scrap their tonnage. The additional cost of retrofitting BWTS along with the special survey will force many owners to scrap younger vessels before the next survey is due.

Drewry estimates that about 74 crude tankers (14 mill. dwt) and 114 product tankers (5.6 mill. dwt) will have their fourth special survey due between mid-2018 and 2021, making them potential victims of the new regulation.