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How Crude Tanker Companies Differ Based on Their Fleets

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Fleet profile

The fleets that tanker companies employ have several fundamental implications.

The chart below shows the fleet composition for the following crude (DBO) tanker companies:

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Implications

Larger vessels such as VLCCs (very large crude carriers) are costlier, with higher fixed costs. This means that companies with more VLCCs are more leveraged.

Leverage is a double-edged sword. When a company’s revenue is high and its costs are fixed, profits see a boost. On the other hand, when revenues are low, higher fixed costs lower profits.

Crude tanker demand also depends on regional factors. For example, Suezmax vessels are preferred when transporting oil from the Middle East to Europe through the Suez Canal, as fully loaded VLCCs cannot pass through this canal.

VLCCs are generally more in demand for Asian routes. Recently, the ban on the US exporting oil was lifted. The infrastructure of US ports does not support large tankers. Only small tankers, especially Aframax, will be in demand in this region.

Fleet comparison

DHT Holdings (DHT) has 20 VLCCs, which make up 90% of its total fleet. Euronav’s (EURN) 30 VLCCs make up 55% of its total fleet. Frontline (FRO) has 30 VLCCs, 22 Suezmax, and 24 Aframax in its fleet of 79 tankers.

Nordic American Tankers (NAT) owns 30 Suezmax tankers, with no presence in other tanker segments. Teekay Tankers (TNK) has 22 Suezmax and 20 Aframax tankers in its fleet of 60 tankers.

Tsakos Energy Navigation (TNP) and Teekay have both product tankers and crude tankers. This fleet data includes newbuilds in the pipeline.

Investors interested in broad exposure to the industrials sector could invest in the SPDR Dow Jones Industrial Average ETF (DIA).

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