" I don't see how anyone running VLCCs can survive in this environment"

 

Except like NAT, by keeping the break even cost very, very low.  BALT has a similar business model, but in the dry bulk sector.  BALT has daily vessel operating expenses (DVOE) of approximately $5300 per vessel.  According to the first quarter report BALT also has low debt and a strong balance sheet.  I'm thinking that dry bulk and container shipping will turn around well before crude carriers.

 

The fleet size change appears much more favorable for dry bulk ships than is the case for crude carriers.  Info below is from BALT presentation:

 

Supply Side Fundamentals
 First quarter 2012 newbuild orders decreased 70% YOY(1)
― Declining newbuilding activity and prices coupled with strong steel prices have put pressure on shipyard margins(2)
 Scarce capital continues
― European lenders are still limiting funding availability
 21% of the fleet is greater than 20 years old and 16% of the fleet is greater than 25 years old(1)
 22.5 mdwt scrapped in 2011 and 10.8 mdwt scrapped in 2012 YTD(1)
 Slippage of newbuilding vessel deliveries as financing concerns continue
 Bangladesh ship breaking has resumed but a new 5% tax has been added for purchasing vessels for scrap
― Twelve vessels were scrapped in Bangladesh during April representing the country’s highest monthly total since June 2011(1)
 China’s Dalian shipyard is reported to begin operation in the second half of 2012 with potential to scrap up to 75 vessels a year(3)