A shipping magnate's extraordinary gamble on the tanker market, described as a once-in-a-generation move, has granted the company overwhelming control. The vast majority of supertankers available for loading in the United States next month are under its command. With backing from MSC, South Korea's Sinokor has aggressively purchased Very Large Crude Carriers (VLCCs), achieving an unprecedented level of control over the globally available spot-tanker fleet. Competitors have labeled this expansion as a "disruptive move," which has driven tanker charter rates to multi-year highs.
This week, Sinokor's market dominance became even more apparent. Nearly all available VLCCs along the U.S. Gulf Coast, a primary hub for American oil exports, are now controlled by the company. Data from the shipping analytics platform Signal Ocean indicates that for the next 30 days, every vessel capable of reaching the U.S. Gulf that is currently not carrying cargo is managed by Sinokor. This assessment aligns with the views of multiple participants in the tanker market, who confirm Sinokor's absolute dominance in the available capacity for this region.
This extreme situation is the clearest signal yet that Sinokor's aggressive expansion is reshaping the tanker market and boosting earnings for shipowners. On Thursday, the charter rate for a VLCC traveling from the U.S. Gulf to China surpassed $17.3 million, reaching its highest level since 2020. Market analysts note that controlling a large portion of available capacity gives Sinokor significantly greater influence over setting charter rates.
Halvor Ellefsen, a director at Fearnley's Shipbrokers UK Ltd. in London, commented, "While it's not a complete monopoly, the alternatives are extremely limited, especially for clients seeking vessels that are empty and ready for a voyage." Tanker freight rates were already strong, supported by surging oil production, the return of Venezuelan crude to international markets, and geopolitical risks such as potential U.S.-Iran tensions.
Recent estimates from a shipowner suggest Sinokor now controls approximately 150 tankers, which is close to 40% of the global total of available, non-sanctioned tankers not bound by long-term contracts. This has also contributed to a sharp increase in freight rates on the benchmark Middle East-to-China route. Signal Ocean data further shows that even when including vessels that are currently carrying cargo but could reach the U.S. Gulf within the next 30 days, Sinokor still controls about two-thirds of the available capacity.
Sinokor has not yet responded to requests for comment. The company has so far not publicly discussed its significant acquisitions or charters of VLCCs.
In market operations, shipowners typically inform brokers and potential charterers about their vessels' schedules. This information is aggregated and disseminated, painting a picture of overall available capacity for a specific period. Consequently, estimates can vary between brokers based on differing expectations of when a vessel becomes available.
It is noteworthy that a significant number of Sinokor's tankers are crossing the Atlantic empty, following the completion of unloading for many of its ships in Asia in mid-January. When VLCC capacity is extremely tight, alternatives exist in the market. As freight rates soar, it can sometimes be less expensive to transport the same volume of oil using two smaller vessels instead of one large VLCC. Recently, charter rates for vessels capable of carrying one million barrels of oil have also risen significantly.
The industry anticipates that freight rates will continue to climb. According to a broker and chartering transaction report, one order has already been placed to charter a Sinokor VLCC for a voyage from the U.S. Gulf to China in late March, at a rate of $18 million. When asked about Sinokor's acquisition strategy during an earnings call, Lois Zabrocky, CEO of VLCC operator International Seaways, stated, "This represents a fundamental and sustained shift in the ownership structure."
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