At the core of any fundamental market analysis lies supply and demand of the asset. Higher demand with the same supply results in higher prices and vice-versa. Asset or fleet utilization is one way to measure the supply and demand balance and in turn the market price. It is a measure of the actual use of an asset divided by the number of assets available to use.
There are multiple methodologies to define & compute ‘Fleet Utilization’ but we will focus on the approach that uses the number of laden and ballast vessels versus the total fleet.
While simplistic in its approach, this method gives us time series that can undergo trend analysis and be further fed to machine learning models and price forecast models. (Stay tuned for the article on fleet utilization calculated using tonmiles,ton-days,fleet capacity etc)
We will follow a quick case study for VLCC tankers in 2020 to exhibit global fleet utilization and its significance. Using the laden vessel count approach we obtain the below chart.
It charts on any given day, what percentage of the fleet was employed versus unemployed. If laden % is improving, less ballast tonnage is available to be chartered implying higher demand for the fleet, better utilization and better rates.
This scenario was clearly observed in early 2020, when oil price wars led to high exports from OPEC, record low oil prices & high floating storage, all of which resulted in record high loaded % of fleet at above 55% (# of laden VLCCs/Total VLCCs = 502/911) and super tanker rates (TD3C-TCE above 200k $/day.) Since then though the market has stabilized and was in fact struggling with low demand up until May 2021 (TD3C-TCE below 2k $/day.)
In addition to the charts on our webapp, users can access our APIs either directly or via excel-add in. You can also check our SDK guide for fleet utilization.
from datetime import date
... from kpler.sdk.resources.fleet_utilization_series import FleetUtilizationSeries
... from kpler.sdk import FleetUtilizationSeriesMetric, FleetUtilizationSeriesPeriod,FleetUtilizationSeriesSplit, FleetUtilizationSeriesUnit
... fleet_utilization_series_client = FleetUtilizationSeries(config)
Fleet utilization is a simple and effective metric to access fleet supply and demand quickly & identify market bottoms and tops. It correlates well with relevant tanker rate indices as well serves as a valuable input into trading signal models/bespoke SnDs, the scope of which is beyond any tutorial and we leave it to industry experts to utilize the metric as it best suits their need.
Thank you for reading this ! To learn more about regional and vessel segment fleet utilization or to get free access to the data, please visit Kpler Freight page.
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