Diverting tankers could cost $250,000 - brokers

18 November 2008 13:12  [Source: ICIS news]

By Dan Horlock

LONDON (ICIS news)--The additional cost of diverting vessels around the Cape of Good Hope as opposed to using the Gulf of Aden, Red Sea and Suez Canal could be as much as $250,000, European shipping brokers said on Tuesday.

This was based on a route from the oil port of Basra in southern Iraq to Rotterdam in the Netherlands taking an extra 10 days not accounting for bad weather around the cape.

For example, on very large crude carriers (VLCCs) up to 200,000 dwt travelling at 13 knots, this would include a time charter rate of $35,000 a day and a bunker fuel consumption rate of around $70/tonne.

Another broker used the example of Ras Tanura, Saudi Arabia's main Gulf loading port, to Rotterdam.

Along this route it would take an extra 14-15 days at a speed of 13-14 knots going via the Cape of Good Hope. However, the source could not estimate how much owners would have to pay as an additional charge.

“With those size of tankers there are all number of factors to consider. Daily consumption rates, time-charter hire values, the Suez Canal tolls. On that basis it would be impossible for me quote how much extra it might cost,” the broker source said.

The planned diversions were a result of the escalating piracy situation off the coast of Somalia as owners were looking for a solution to avoid the region.

Odfjell president and CEO Terje Storeng announced on Monday that the chemical tanker group would no longer use the route unless committed by existing contracts.

The significant extra costs and customers’ support and contribution cited by Storeng were not well received by shipping brokers.

“This is a personal choice for the owner. Unless they all agree to a surcharge for taking the alternative route then it is the owners' cost to absorb,” one Belgian broker said.

Another broker said the diversions may not affect Odfjell as it might other owners, which could be a possible reason for its decision.

“Odfjell has contracts to Cape Town and Durban and so they already have vessels moving along the route,” he said.

From January to September of this year, there were 63 reported incidents of piracy in the Gulf of Aden and off the coast of Somalia, doubling year on year, according to the Kuala Lumpur-based International Maritime Bureau (IMB).

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By: Dan Horlock
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