LPG carriers are specially used to carry liquefied petroleum gas which can be obtained by means of low temperature or high pressure. They are characterized by high construction techniques and high prices. At present, there are only 82 LPG carriers in China.

Data

According to data collected by Eshiptrading.com, 64 LPG carriers in China operate on domestic routes, composed of 40-plus units sailing along the coast and 20-plus units in inland rivers. Their operating time averages 12 years with six in operation for over 20 years, so it is time for these oldies to be gradually phased out.

Stricter Regulations Raise Shipowners' Costs

In recent years, various regulatory policies have been coming one after another amid our growing awareness of the shipping safety of dangerous chemicals, shipping pollution, and crew's rights and interests. As far as Eshiptrading.com knows, LPG carriers in China are mainly owned and operated by private companies. The increasingly severe market is posing increasingly big challenges to them.

The stricter seventh version of the Vessel Inspection Questionnaire (VIQ7) will take effect on Sept. 17, 2018. VIQ is part of Ship Inspection Report Programme introduced by the Oil Companies International Marine Forum (OCIMF).

Most oil terminals are under the control of oil giants, so LPG carriers are subject to the questionnaire. If a shipowner fails the questionnaire, its image will be tarnished, and it will lose the trust from its clients.

In addition, the Maritime Labour Convention, 2006, launched by the International Labour Organization (ILO), started to take effect in China on Nov. 12, 2016. Under the convention, crew working aboard China-flagged vessels enjoy the same rights and interests as those in other countries. Therefore, China's shipping companies need to spend more on this aspect.

Capacity Limiting Policy

Last July, China's Ministry of Transport introduced the assessment method of shipping companies' application for adding new carrying capacities to their LPG carriers, and it announced the list of the successful applicants in the same year.

Yin Hai, secretary-general of Liquefied Gas Transportation Committee under China Shipowners' Association, pointed out in 2010 that the country's LPG shipping sector was struggling with severe overcapacity. Not long afterwards, the ministry released two announcements on the enhancement of capacity control in the LPG shipping market. The above-mentioned assessment method is the result of these two announcements.

Therefore, it is very clear that in order to meet the current market demand, China's LPG carrier operators need to rejuvenate and upgrade their fleets soon.