Last month we posted that tanker charter rates  were at the lowest they have been in 14 years and that the number of large tankers in lay up was approaching levels similar to those during the slump in the 1980′s.  This week, the tough times in the tanker markets claimed a high profile victim as General Maritime Corporation filed for Chapter 11 bankruptcy protection.  General Maritime operates a fleet of 7 VLCC, 11 Suezmax , 10 Aframax, 2 Panamax, and 4 Handysize tankers and once had a $5.3bn market capitalization.

Tanker overcapacity continues to cripple freight rates. Fifty new VLCCs (Very Large Crude Carriers) started trading this year, an increase in world tanker capacity of 10%.  New tankers on order represent another 19% increase in capacity.  Increased scrapping of older ships is helping to limit overcapacity somewhat but freight rates are still below breakeven costs. After bottoming out in September with VLCC spot daily charter rates falling to near $2,000 per day, rates have risen to close to $14,000 per day, still significantly well below published breakeven rates of close to $30,000 per day.  A report by Arctic Securities ASA suggests that new VLCCs will run at a loss for at least 24 months, as supply outpaces demand and prolongs the existing slump in freight rates.