The Ageing Tanker Fleet: Why Decarbonisation Could Tighten Global Freight Markets

Tanker shipping moves the large majority of the world’s traded crude oil, refined products, and a growing share of liquid chemicals and fertilizer feedstocks, making its cost structure a direct input into global energy and commodity prices. Two structural forces are now converging on this fleet at the same time. First, the global tanker fleet is ageing, and fleet renewal has historically not kept pace with retirements. Second, decarbonisation requirements from the International Maritime Organization (IMO) and the European Union are progressively changing the economics of operating older vessels, independent of whether those vessels remain technically seaworthy.

This combination matters because nominal fleet capacity is not the same as effective, economically competitive trading supply. A vessel can remain registered and classed while becoming commercially disadvantaged through higher fuel and carbon costs, retrofit obligations, charterer avoidance, or reduced routing flexibility. This article asks a specific, falsifiable question: could ageing, limited renewal and decarbonisation combine to reduce effective tanker supply enough to tighten freight markets structurally, and what would that mean for delivered commodity costs? The answer, as the evidence below shows, is conditional rather than certain and 2026 itself supplies an important complication, since tanker newbuilding ordering has surged even as the underlying fleet keeps ageing.

Weighted by gross tonnage, the global merchant fleet averaged 12.6 years of age in 2024, up 3.2% year-on-year, and more than three years older than a decade earlier; weighted by vessel count it averaged 22.2 years. Ageing is uneven: developing economies registered tonnage over 20 years old (21.1% of DWT) is more than twice the developed-economy share (9.3%), a gap with implications for where recycling pressure eventually concentrates. Within tankers specifically, the average crude tanker is now roughly 14 years old, and around 22% of crude tanker capacity (about 105 million DWT) already exceeds the 20-year mark commonly associated with recycling consideration; the product tanker fleet shows a broadly similar, slightly lower ageing profile.

Shipyard capacity is concentrated in a small number of countries, chiefly China and the Republic of Korea, and construction slots, equipment and skilled labour are all finite in the near term. Tanker newbuilding also competes directly with demand from other segments – LNG carriers, container ships and dual-fuel or alternative-fuel vessels required for the broader energy transition – for the same limited yard capacity. This creates a structural paradox: the vessels needed to decarbonise shipping can crowd out the yard slots needed simply to replace ageing conventional tonnage.

Public market reporting shows this tension playing out in real time. The crude tanker orderbook-to-fleet ratio, only around 14% in late 2025, rose sharply to a range of roughly 22–27% by mid-2026 (with VLCC ordering alone reportedly rising from about 12% to over 30% of the live fleet), as owners responded to strong freight earnings and fleet-age pressure by placing a record volume of newbuilding contracts. This ordering wave is a genuine, defensible sign that renewal is accelerating – but it does not resolve the near-term tightness question, because the resulting deliveries are scheduled predominantly for 2028–2030, and only a small share (on the order of 2%) of 2026’s newly ordered crude tanker capacity is being built for alternative fuels outright, with a further portion designed merely to allow future retrofit. In the interim, the existing, ageing fleet still carries the trade.

EEXI and CII

The Energy Efficiency Existing Ship Index (EEXI) sets a one-off technical efficiency benchmark for existing vessels, while the Carbon Intensity Indicator (CII) assigns an annual operational efficiency rating (A–E). Both requirements took effect from 2023, with the first CII ratings assigned from 2024; older, less efficient vessels are structurally more exposed to weaker CII ratings, which can affect chartering and financing decisions even absent any legal obligation to scrap the vessel.

IMO 2023 GHG Strategy and the Net-Zero Framework

The IMO’s 2023 GHG Strategy targets at least a 20% (striving for 30%) reduction in carbon intensity by 2030, an indicative ambition for 2040, and net-zero GHG emissions from international shipping by or around 2050. The associated Net-Zero Framework – which would impose annual GHG fuel-intensity limits backed by a pricing and credit mechanism – was approved in principle at MEPC 83 in April 2025, but its formal adoption was not completed: an extraordinary MEPC session in October 2025 voted (57–49, with 21 abstentions) to adjourn the decision for one year amid sustained political opposition. Technical guideline work continued at MEPC 84 in April 2026, and adoption is now scheduled to be reconsidered at a reconvened session around October–November 2026 (MEPC 85). As of September 2026, the Net-Zero Framework is therefore approved in principle but not yet legally adopted or in force; if and when adopted, entry into force would follow roughly 16 months later under MARPOL’s tacit acceptance procedure. This distinction – between an approved concept and a binding requirement – is material to any effective-supply forecast, since the framework’s cost impact on older tonnage has not yet crystallised.

EU ETS and FuelEU Maritime

Maritime emissions have been phased into the EU Emissions Trading System since 2024, with shipping companies required to surrender allowances for 40% of verified emissions in 2024, 70% in 2025, and 100% from 2026 onward – a cost that scales with a vessel’s actual fuel consumption and therefore weighs more heavily on older, less efficient tonnage. In parallel, FuelEU Maritime has applied in full since 1 January 2025, requiring a progressive reduction in the greenhouse-gas intensity of energy used on board (measured well-to-wake against a 2020 baseline of 91.16 gCO₂e/MJ), starting at a 2% reduction in 2025 and rising to 6% by 2030 and up to 80% by 2050, enforced through a financial penalty on non-compliant vessels.

Heavy fuel oil (HSFO), typically paired with exhaust-gas scrubbers, and low-sulphur fuel oil (LSFO), the default compliant fuel since the IMO’s 2020 sulphur cap, remain the mainstay of the existing fleet but offer limited decarbonisation potential on their own. LNG has become the leading transitional alternative, supported by a growing base of dual-fuel newbuilds and roughly 200 ports offering LNG bunkering by 2024, but it should not be described as a zero-carbon fuel: unburned methane slip and its lifecycle emissions profile constrain its long-run role. Methanol – conventional, bio- or e-methanol – and ammonia are both gaining newbuild interest; ammonia in particular is viewed as a potential near-zero-carbon pathway when produced from low-carbon sources, but it faces significant toxicity, safety, supply and bunkering-infrastructure constraints that remain largely unresolved at scale. Across all these fuels, combustion emissions and full lifecycle (well-to-wake) emissions must be distinguished, since a fuel’s onboard performance can look very different from its total climate impact.

Alternative-fuel adoption depends on where vessels can actually refuel. LNG bunkering infrastructure is now reasonably established at major hubs; methanol and ammonia bunkering remain early-stage, concentrated in a small number of pioneer ports investing in storage and safety systems. Because bunkering availability is geographically uneven, it can influence vessel routing, fleet deployment decisions, and ultimately port competitiveness, as owners and charterers favour routes and hubs where compliant fuel is reliably available.

Effective freight supply is the net outcome of tonne-mile demand, fleet growth, newbuilding deliveries, recycling, fleet age, regulatory constraints and geopolitics. Several of these have pushed in a tightening direction recently: continued Red Sea disruption has kept a share of trade rerouted via the Cape of Good Hope, extending voyage distances, while sanctions-related shifts in crude sourcing have altered trade patterns. According to the U.S. Energy Information Administration, VLCC rates from the Persian Gulf reached their highest levels since summer 2020 in November 2025, and Suezmax rates their highest since November 2022, before both eased into early 2026 amid seasonal demand softness – illustrating just how volatile and geopolitically sensitive this market remains, and why no single rate should be read as representative of the whole tanker market.

Freight is one input among several – alongside carbon/compliance costs and other logistics costs that combine with the FOB commodity price to determine delivered cost for crude oil, gasoline, diesel/gasoil, jet fuel, naphtha, fuel oil, LPG, chemicals (including methanol and aromatics) and, where ammonia or nitrogen products are concerned, fertilizers. Structurally higher or more volatile freight and carbon costs would be expected to widen regional price spreads, alter arbitrage economics between basins, compress refinery margins on longer hauls, and add a further variable that procurement and trading desks must manage alongside supply-chain resilience.

Traditional tanker economics nets freight revenue against fuel, operating expenditure, financing and voyage costs. A carbon-adjusted view additionally deducts carbon cost, compliance cost and retrofit cost – meaning two vessels earning an identical headline freight rate can occupy very different economic positions once EU ETS exposure, FuelEU penalties, CII-linked chartering preference and retrofit capital are taken into account. This is the mechanism through which regulation, rather than physical obsolescence alone, can erode an older vessel’s competitiveness.

The tightening thesis can fail under several plausible conditions: weaker oil demand or refinery throughput; the record 2026 newbuilding wave translating into an outsized delivery bulge from 2028; accelerated recycling of older tonnage that removes supply faster than it removes demand for it; wider adoption of slow steaming and efficiency retrofits that extend older vessels’ competitive life; faster-than-expected alternative-fuel uptake; or a normalisation of Red Sea and other geopolitical disruptions that shortens average voyage distances and releases effective capacity. Any combination of these would push outcomes toward the Low Tightening scenario rather than the High Tightening case, underscoring that ageing and regulation create the conditions for tightness without guaranteeing it.

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