Dry bulk and container rates tank , but not of tankers

The disruption in global trade brought on by the Covid-19 pandemic has landed the shipping industry in troubled waters.

Charter rates of dry bulk and containers carriers have borne the brunt of the economic slowdown as demand dried up. Worse still, the outlook for these segments remains bearish for the rest of the year.

Yet, tanker owners are smiling.

That’s because a crash in crude oil prices earlier this year had led to a situation known as ‘oil contango’, wherein the price of an oil futures contract exceeds the spot price. This sparked a rush for booking vessels to be used as floating storage.

Thus, even as dry bulk and container rates wallowed, tanker charter rates were ~44% higher on-year in the first half of 2020.