FSRUs a better investment opportunity than LNG carriers, new report reveals
Despite falling freight rates for floating storage regasification units (FSRUs), investment returns at current asset prices and charter rates are higher compared with standard LNG vessels, according to a new report.
The latest edition of the LNG Forecaster report published by global shipping consultancy Drewry found that the global FSRU fleet has grown at a CAGR of 21% over the last five years, and currently there are 24 FSRUs operational with an aggregate LNG import capacity of 82mn tonnes per annum (mtpa).
An additional 74 mtpa FSRU import capacity is under construction or in the planning stage.
Drewry said that FSRUs are attractive because of various advantages they have over land-based terminals, such as low cost, quick commencement and flexibility.
However, of late rates for FSRUs have come under pressure and are currently around $100,000 per day (pd), markedly lower than $120,000-130,000pd in 2013-15.
“There are several reasons for this,” said the report.
“First, the number of players in the FSRU segment is growing, which is creating competition for the business. Secondly, falling asset prices of FSRUs is making it possible to charter out vessels at lower rates. Third, several old LNG vessels are looking to get an FSRU conversion contract, which adds to the pressure on charter rates.”
Despite falling rates, owning an FSRU gives a better return than an LNG vessel, said Drewry.
The company has calculated the rate of return on a newbuild FSRU to be 16% that currently costs $250mn and earns a long-term (20 years) charter rate of $100,000pd.
Meanwhile, the rate of return on a newbuild standard LNG vessel is just 13% that currently costs $185mn and earns a long-term charter rate of $70,000pd. Therefore, despite falling charter rates, FSRUs are proving to be a better investment option than standard LNG carriers.
“We expect long-term charter rates for LNG carriers to improve in the coming years as the market is expected to tighten,” said Shresth Sharma, Drewry’s lead LNG shipping analyst.
“However, we do not believe that charter rates for FSRUs will significantly change because of increasing competition and a growing understanding of FSRU technology. We expect charter rates for FSRUs to stay in the range of $90,000-$100,000pd for the next three to four years, still higher than equivalent LNG charter rates.”
Gartner: Women in supply chain at five-year high
Women now represent a greater percentage of the supply chain workforce than at any other point in at least the past five years, according to a recent Gartner survey.
The Women in Supply Chain Survey 2021, conducted by Gartner and Awesome, surveyed 223 supply chain organisations with more than $100m in annual revenue from February through to the end of March 2021.
- Women represent 2% more of supply chain workforce than in 2020
- Women now account for 42% of the workforce
- Number of women in exec-level positions declined by 2%
- Just 15% of top leadership are women (17% in 2020)
- 84% of organisations say COVID-19 did not impact efforts to advance women
It found that women now represent two per cent more of the supply chain workforce than in 2020, accounting for 42%, compared with 39% last year. Dana Stiffler, Vice President Analyst with the Gartner Supply Chain practice, says the impact of COVID-19 on supply chain was significant, though different to other sectors.
"Contrary to other industries, supply chain’s mission-criticality during the COVID-19 pandemic has meant that many sectors did not reduce their workforce, but rather continued to hire and even faced talent shortages, especially in the product supply chains," she said. "This resulted in many women not only standing their ground in supply chain organisations but increasing their representation in organisations. We also recorded a record number of specific commitments and supply chain-led actions and saw existing programs starting to pay off."
Supply chain still lacks women in executive leadership
But the elephant in the boardroom remains. Though the figures present a positive step towards greater diversity and gender equality at all levels, the number of women in executive level positions declined by two per cent in the past year. Women represent just 15% of the upper echelons of supply chain leadership. Gartner did however record a rise in women at all other levels of leadership.
The vast majority (84%) of organisations surveyed said the outbreak had no discernible impact on their ability to retain and advance women. But more than half (54%) admitted that retaining mid-career women was becoming increasingly difficult. A lack of career opportunities was cited as the biggest challenge to this, while other blamed a lack of development opportunities.
Despite these challenges, companies of all sizes are becoming broadly better at gender diversity. Around a third more said they had a targeted initiative focused on attracting women and advancing their careers.
Stiffler said a push towards measurable and formal initiatives is at least pointing in the right direction: “It's encouraging to see that the larger share of this jump was for more formal targets and specific goals on management scorecards. For these respondents, there is greater accountability for results — and we see the correlation with stronger representation and inclusion showing up in pipelines.”