On 05/30/24, tanker company Frontline Plc (FRO) reported their Q1 2024 results. Over the last 16 - 17 years, while my FRO stake has ebbed-and-flowed, I have always kept the company on my radar. Why? The company management keep you informed on the tanker/shipping sector.
This time around, the significant data-point is the number of shipyards.
In 2011, there were 519 shipyards around the world
In 2024, there are 247 shipyards around the world
That’s a 52% decline.
There’s more data on Slide 11
https://ml-eu.globenewswire.com/Resource/Download/939d8e7e-2442-49b7-9e4c-613a57df9e72
Macro implications:
With tighter vessel availability, the beneficiaries of the shipping market (any flavor of shipping) will be those owners with more sea-worthy vessels and/or owners who have placed vessel orders in the near term.
2 Bonus shipping points from one event.
Back in Oct 2023, two tanker rivals Frontline (FRO) and Euronav (EURN) finally came to an agreement where FRO would acquire 24 VLCC (Very Large Crude Carriers) from EURN in exchange for $2.35B (in cash and/or EURN shares). The move resulted in
- Frontline greatly expanding its tanker footprint with “on-the-water” vessels
- Euronav begin planning a transition from a tanker company to a clean energy and infrastructure company, as well as upgrading its fleet (going forward, EURN will be involved in multiple forms of shipping)