Optimal speed (knot)

advertisement
Speed optimisation
Petter Haugen, Equity Research, Shipping, DNB Markets
Bunker is now about 70% of the total cost
Division between bunkers and hire
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
40%
30%
20%
10%
Assumptions/sources: VLCC, 92t/day at 15.9 knot (average in Clarksons
World Fleet Register); 1 year TC-rates until year 2000 (Clarksons); Spot
rates from 2001 until April 2012 (Poten&Partners)
2
2012
2010
2008
2004
0%
2002
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
50%
2000
20,000
60%
1998
40,000
70%
1996
60,000
80%
1994
80,000
90%
1992
100,000
1988
USD/day
120,000
90,897
108,357
140,000
1990
TC-hire
TC-hire
100%
1988
Bunker
Bunker
Relative divition between vesel hire and
bunkers
160,000
2006
140,199
Historic freight cost
The basis for any speed optimisation model is the relationship
between bunker consumption and vessel speed
 Theory (MAN) says
that:
120
DNB new
MAN
100
  =  3.2
Consumption (tonne/day)
10% speed reduction
= 30% consumption
reduction
 Based on collected
data we believe
this is too generic
and assume a
higher fuel
consumption for
the same speed in
our modelling
82
80
60
10% speed reduction
= 20% consumption
reduction
40
41
20
0
5
7
9
11
Speed (knot)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
13
15
17
Assumptions: VLCC consuming 92 tonne/day on
15.9 knot.
3
Speed optimisation = common sense
 Idea is simple:
Reduce speed until
the point of which
the additional
savings from
bunker is equal to
the additional cost
of using extra days
in sea
1.8
Bunker cost
TC cost
Optimal speed
1.4
10 knot
Ballasting cost on TD3 (mUSD)
1.6
1.2
1.0
0.8
0.6
0.4
0.2
16
15
14
13
12
11
10
9
8
7
6
5
0.0
Vessel speed (knot)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
Assumptions: Route is TD3, this is the ballast
leg. VLCC consuming 92 tonne/day on 15.9 knot,
TC-rate USD20,000/day, bunkers USD700/tonne
4
The third speed-dependent cost is cargo financing
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
6.1 %
1.4 %
Assumptions/sources: VLCC, 92t/day at 15.9 knot (average in Clarksons
World Fleet Register); 1 year TC-rates until year 2000 (Clarksons); Spot
rates from 2001 until April 2012 (Poten&Partners); LIBOR 3 month,
Bloomberg
5
2012
0%
2010
0
2008
0%
1%
2006
1%
50
2004
2%
2%
2002
3%
3%
1996
100
1994
4%
4%
1992
150
% hire cost
5%
1990
5%
6%
1988
6%
Transportation cost as % of total
delivered cost
200
% bunker cost
7%
Value of cargo (mUSD)
7%
% financing cost
250
8%
8%
Value of cargo (rhs)
1988 30
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
1%
2012
3 mth LIBOR (yearly average)
9%
2000
300
Interest rate (3 mth LIBOR, lhs)
240
10%
Assuming no interest margin above LIBOR
makes the financing cost go away
1998
The value of the cargo on a VLCC is record high,
but interest rates are record low
The charterer likes it fast, owner prefers it slow
Neglecting the finance cost aligns charterer’s and
owner’s incentives
Charterer's optimal speed
Owner's optimal speed
7.5
25
7.0
20
10
6.5
15
6.0
10
5.5
5
5.0
0
4.5
10
-5
4.0
3.5
-10
3.0
-15
Owner’s income (TCE, kUSD/day)
Charterer's cost (USD/ton)
Charterer's cost (USD/tonne)
Owners income (TCE)
The inclusion of finance cost, say 5%, results in
different speed preferanses
5 6 7 8 9 10 11 12 13 14 15 16 17 18
Vessel speed (knot)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
Assumptions: Route is TD3, this is the laden leg. VLCC consuming 92 tonne/day on 15.4
knot, TC-rate USD20,000/day, bunkers USD700/tonne. Idea is that the owners receive
payment in USD/tonne equivalent of the charterer’s cost, hence owner use this USD/tonne
in this maximisation of the TC-equivalent (which then will be above kUSD20/day). Note that
the TC-eqv. is the same as assumed TC-rate on charterer’s optimal speed.
6
With a record high oil price, your interest rate is record important
Interest rate: 5%, bunkerprice: USD700/tonne, oil
price: USD117/bbl, TC-rate: kUSD20/day
Financing cost
Port cost
16
Bunker cost
Optimal speed
Interest rate: 10%, bunkerprice: USD700/tonne, oil
price: USD117/bbl, TC-rate: kUSD20/day
TC cost
12 knot
Charterer’s cost (USD/tonne)
14
12
10
8
6
4
2
16.0
15.0
14.0
13.0
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.0
0
Vessel speed (knot)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
Assumptions: Route is TD3, this is the laden leg. VLCC consuming 92 tonne/day
on 15.4 knot, TC-rate USD20,000/day, bunkers USD700/tonne.
7
Optimal speed will depend on:
1) Interest rate, 2) TC rate and 3) bunker/oil price
1) Higher interest rate incentivise higher speed
(bunker price: USD700/tonne)
2) Higher TC rate incentivise higher speed
(interest rate: 5%)
16
16
15
15
Optimal speed (knot)
Optimal speed (knot)
14
13
12
11
10
9
TC: USD5000/day
8
14
13
12
Bunker price
USD100/tonne
11
Bunker price
USD700/tonne
TC: USD20000/day
7
10
6
0%
5%
10% 15% 20%
Interest rates (%)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
25%
30%
0
10,000
20,000 30,000 40,000 50,000
TC rates (USD/day)
Assumptions: VLCC consuming 92 tonne/day on 15.4 knot,
oil price = bunker price/6
8
3) Bunker and oil prices correlate very well, but have opposite
implications for speed optimisation. Bunker wins!
Ballast, only impact from oil price is on bunker cost
Laden; higher oil price incentivise higher speed, but
higher bunker price incentivise lower speed
17
17
TC rate
USD10,000/day
15
16
TC rate
USD50,000/day
14
Optimal speed (knot)
Optimal speed (knot)
16
13
12
11
15
14
13
12
11
10
10
9
9
8
8
0
250
500
750
Bunker price (USD/tonne)
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
1,000
TC rate
USD10,000/day
TC rate
USD50,000/day
0
250
500
750
Bunker price (USD/tonne)
Assumptions: Route is TD3, this is the laden leg. VLCC consuming 92 tonne/day
on 15.4 knot, interest rate 5%, oil price = bunker price/6
9
1,000
Bunker prices (USD/ton); Oil price (USD/bbl)
How to operationalise the speed optimisation opportunity?
Oil price
17
25
33
42
50
58
67
75
83
92
100
108
117
125
133
142
150
158
167
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
850
900
950
1,000
2,500
12.3
12.0
11.8
11.7
11.6
11.6
11.5
11.5
11.5
11.4
11.4
11.4
11.4
11.4
11.4
11.4
11.3
11.3
11.3
5,000
13.1
12.6
12.3
12.1
12.0
11.9
11.8
11.7
11.7
11.7
11.6
11.6
11.6
11.5
11.5
11.5
11.5
11.5
11.5
TC rates (USD/day)
7,500 10,000 12,500 15,000 17,500 20,000 22,500 25,000 27,500 30,000 32,500 35,000 37,500 40,000 42,500 45,000 47,500 50,000
13.8
14.4
14.9
15.3
15.7
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
13.1
13.6
14.0
14.4
14.7
15.0
15.3
15.6
15.8
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
15.9
12.8
13.1
13.5
13.8
14.1
14.4
14.6
14.9
15.1
15.3
15.5
15.7
15.9
15.9
15.9
15.9
15.9
15.9
12.5
12.8
13.1
13.4
13.7
13.9
14.2
14.4
14.6
14.8
15.0
15.1
15.3
15.5
15.6
15.8
15.9
15.9
12.3
12.6
12.9
13.1
13.4
13.6
13.8
14.0
14.2
14.4
14.5
14.7
14.9
15.0
15.2
15.3
15.4
15.6
12.2
12.5
12.7
12.9
13.1
13.3
13.5
13.7
13.9
14.1
14.2
14.4
14.5
14.7
14.8
14.9
15.1
15.2
12.1
12.3
12.5
12.8
13.0
13.1
13.3
13.5
13.7
13.8
14.0
14.1
14.2
14.4
14.5
14.6
14.7
14.9
12.0
12.2
12.4
12.6
12.8
13.0
13.1
13.3
13.5
13.6
13.7
13.9
14.0
14.1
14.3
14.4
14.5
14.6
11.9
12.1
12.3
12.5
12.7
12.8
13.0
13.1
13.3
13.4
13.6
13.7
13.8
13.9
14.0
14.2
14.3
14.4
11.9
12.1
12.2
12.4
12.6
12.7
12.9
13.0
13.1
13.3
13.4
13.5
13.6
13.8
13.9
14.0
14.1
14.2
11.8
12.0
12.2
12.3
12.5
12.6
12.8
12.9
13.0
13.1
13.3
13.4
13.5
13.6
13.7
13.8
13.9
14.0
11.8
11.9
12.1
12.2
12.4
12.5
12.7
12.8
12.9
13.0
13.1
13.3
13.4
13.5
13.6
13.7
13.8
13.9
11.7
11.9
12.0
12.2
12.3
12.5
12.6
12.7
12.8
12.9
13.0
13.1
13.2
13.3
13.4
13.5
13.6
13.7
11.7
11.8
12.0
12.1
12.3
12.4
12.5
12.6
12.7
12.8
12.9
13.0
13.1
13.2
13.3
13.4
13.5
13.6
11.7
11.8
11.9
12.1
12.2
12.3
12.4
12.5
12.7
12.8
12.9
13.0
13.1
13.1
13.2
13.3
13.4
13.5
11.6
11.8
11.9
12.0
12.1
12.3
12.4
12.5
12.6
12.7
12.8
12.9
13.0
13.1
13.1
13.2
13.3
13.4
11.6
11.7
11.9
12.0
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
13.0
13.1
13.1
13.2
13.3
11.6
11.7
11.8
12.0
12.1
12.2
12.3
12.4
12.5
12.6
12.6
12.7
12.8
12.9
13.0
13.1
13.1
13.2
11.6
11.7
11.8
11.9
12.0
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.8
12.9
13.0
13.1
13.1
Assumptions: Route is TD3, this is the laden leg. VLCC consuming 92
tonne/day on 15.4 knot, interest rate 5%, oil price = bunker price/6
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
10
Higher bunker prices is good for owners
275
100%
m dwt
90%
225
85%
200
80%
175
Utilisation of fleet (%)
95%
250
 Idea is simple:
Higher bunker
prices incentivise
lower speed which
reduces effective
supply which
should give higher
rates
75%
2014e
2012e
2010
2008
2006
2004
2002
2000
1998
1996
1994
70%
1992
150
Effective fleet, mid year [m dwt]
Total demand [m dwt]
Utilisation with full speed [%]
Utilisation [%]
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
Source: DNB Markets
11
DISCLAIMER AND STATEMENT THAT AFFECTS YOUR RIGHTS
IMPORTANT/DISCLAIMER
This report must be seen as marketing material unless the criteria for preparing investment research, according to the Norwegian Securities Trading Regulation 2007/06/29 no. 876, are met. This report has been prepared by DnB NOR Markets, a division of DnB NOR Bank ASA.
The report is based on information obtained from public sources that DnB NOR Markets believes to be reliable but which DnB NOR Markets has not independently verified, and DnB NOR Markets makes no guarantee, representation or warranty as to its accuracy or completeness.
Any opinions expressed herein reflect DnB NOR Markets’ judgment at the time the report was prepared and are subject to change without notice. Confidentiality rules and internal rules restrict the exchange of information between different parts of DnB NOR Markets/DnB NOR
Bank ASA and this may prevent employees of DnB NOR Markets who are preparing this report from utilizing or being aware of information available in DnB NOR Markets/DnB NOR Bank ASA which may be relevant to the recipients’ decisions. This report is not an offer to buy or
sell any security or other financial instrument or to participate in any investment strategy. No liability whatsoever is accepted for any direct or indirect (including consequential) loss or expense arising from the use of this report. Distribution of research reports is in certain
jurisdictions restricted by law. Persons in possession of this report should seek further guidance regarding such restrictions before distributing this report. Please contact DnB NOR Markets at +47 22 94 82 72 for further information and inquiries regarding this report, such as
ownership positions and publicly available/commonly known corporate advisory performed by DnB NOR Markets etc, in relation to the Norwegian Securities Trading Act 2007/06/29 no. 75 and the Norwegian Securities Trading Regulation 2007/06/29 no. 876. This report is for
clients only, and not for publication, and has been prepared for information purposes only by DnB NOR Markets - a division of DnB NOR Bank ASA registered in Norway number NO 984 851 006 (the Register of Business Enterprises) under supervision of the Financial Supervisory
Authority of Norway (Finanstilsynet), Monetary Authority of Singapore, and on a limited basis by the Financial Services Authority of UK. Information about DnB NOR Markets can be found at dnbnor.no.
Additional information for clients in Singapore
This report has been distributed by the Singapore branch of DnB NOR Bank ASA. It is intended for general circulation and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should seek advice from a
financial adviser regarding the suitability of any product referred to in this report, taking into account your specific financial objectives, financial situation or particular needs before making a commitment to purchase any such product. Recipients of this report should note that, by
virtue of their status as “accredited investors” or “expert investors”, the Singapore branch of DnB NOR Bank ASA will be exempt from complying with certain compliance requirements under the Financial Advisers Act, Chapter 110 of Singapore (the “FAA”), the Financial Advisers
Regulations and associated regulations there under. In particular, it will be exempt from: - Section 27 of the FAA (which requires that there must be a reasonable basis for recommendations when making recommendations on investments). Please contact the Singapore branch of
DnB NOR Bank ASA at +65 6212 0753 in respect of any matters arising from, or in connection with, this report. We, the DnB NOR Group, our associates, officers and/or employees may have interests in any products referred to in this report by acting in various roles including as
distributor, holder of principal positions, adviser or lender. We, the DnB NOR Group, our associates, officers and/or employees may receive fees, brokerage or commissions for acting in those capacities. In addition, we, the DnB NOR Group, our associates, officers and/or
employees may buy or sell products as principal or agent and may effect transactions which are not consistent with the information set out in this report.
In the United States
Each research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the views expressed in this report accurately reflect that research analyst’s personal views about the company and the securities that are the
subject of this report; and (ii) no part of the research analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in this report. This report is being furnished upon request and is primarily
intended for distribution to “Major U.S. Institutional Investors” within the meaning of Rule 15a-6 of the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934. To the extent that this report is being furnished, or will be disseminated, to non-Major U.S.
Institutional Investors, such distribution is being made by DnB NOR Markets, Inc., a separately incorporated subsidiary of DnB NOR that is a U.S. broker-dealer and a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Any
U.S. recipient of this report seeking to obtain additional information or to effect any transaction in any security discussed herein or any related instrument or investment should call or write DnB NOR Markets, Inc., 200 Park Avenue, New York, NY 10166-0396, telephone number
212-681-3800 or fax 212-681-4119.
In Canada
This email, and any materials attached with it, has been distributed in reliance on the International Dealer Exemption pursuant to NI 31-103 subsection 8.18(2) and subsection 8.18(4)(b). Please be advised that:
1. DnB Nor Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. are not registered in Canada.
2. DnB Nor Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc's jurisdiction of residence is Norway and the United States, respectively.
3. The name and address of the agent for service of process for DnB Nor Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. in the local jurisdiction is: Alberta: Blake, Cassels & Graydon LLP, Attention: Pat Finnerty/Ross Bentley, 855 – 2nd Street S.W., Suite 3500,
Bankers Hall East Tower, Calgary, AB T2P 4J8. British Columbia: Blakes Vancouver Services, Inc., 595 Burrard Street, P.O. Box 49314, Suite 2600, Three Bentall Centre, Vancouver, BC V7X 1L3. Labrador: Stewart McKelvey, Cabot Place, 100 New Gower Street, Suite 1100,
P.O. Box 5038, St. John’s, NL A1C 5V3. Manitoba: Aikins, MacAulay & Thorvaldson LLP, 30th Floor, Commodity Exchange Tower, 360 Main Street, Winnipeg, MB R3C 4G1. Newfoundland: Stewart McKelvey, Cabot Place, 100 New Gower Street, Suite 1100, P.O. Box 5038, St.
John’s, NL A1C 5V3. New Brunswick: Stewart McKelvey, 10th Floor, Brunswick House, 44 Chipman Hill, Saint John, NB E2L 4S6. Nova Scotia: Stewart McKelvey, Purdy’s Wharf Tower One, 1959 Upper Water Street, Suite 900, P.O. Box 997, Halifax, NS B3J 2X2. Ontario:
Blakes Extra-Provincial Services Inc., Suite 2800, 199 Bay Street, Toronto, Ontario M5L 1A9. Prince Edward Island: Stewart McKelvey, 65 Grafton Street, Box 2140, Charlottetown, PE C1A 8B9. Quebec: Services Blakes Quebec Inc., 600 de Maisonneuve Boulevard Ouest,
Suite 2200, Tour KPMG, Montreal, QC H3A 3J2. Saskatchewan: MacPherson, Leslie & Tyerman LLP, 1500 Continental Bank Building, 1874 Scarth Street, Regina, SK S4P 4E9. Northwest Territories: Gerald Stang, Suite 201, 5120-49 Street, Yellowknife, NT X1A 1P8. Yukon:
Grant Macdonald, Macdonald & Company, Suite 200, Financial Plaza, 204 Lambert Street, Whitehorse, YK Y1A 3T2. Nunavut: Terry Gray, P.O. Box 1779, Building 1088C, Iqaluit, NU X0A0H0.
4. There may be difficulty enforcing legal rights against DnB NOR Bank ASA (DnB NOR Markets) and DnB NOR Markets, Inc. because each is a resident outside of Canada and all or substantially all of their assets may be situated outside of Canada.
Nicolay Dyvik
+47 22 94 85 42 | [email protected]
Øyvind Berle
+47 22 94 94 55 | [email protected]
Petter Haugen
+47 22 94 89 15 | [email protected]
Download
Related flashcards

Stock market

18 cards

Currencies of Africa

22 cards

Currencies of Asia

20 cards

Securities (finance)

36 cards

Create Flashcards