Signal Group – digital models of the tanker market

Jul 16 2020


Signal Group builds digital models of the tanker market, based on automatically “reading” e-mails from traders and brokers, extracting data and compiling it with other data including AIS.

Signal Group, based in Athens and London, is building digital models of the tanker market. It has a tool which can automatically “read” e-mails from shipping market participants about vessels available, sought or fixed. It extracts the data from the e-mails, and compiles it in a model together with AIS data and company internal data.

 

Putting everything together, it can create a list of vessels which are available to accept a certain cargo, and an estimate of how much the owner would earn from taking it. Shipowners can use this to assess the strength of their position in the market and whether they should hold for a higher rate.

 

The software also makes forecasts of demands for vessels, which can be used to predict whether the freight rate will go up or down.

 

The service can also give useful market information. For example, you can see what impact Libya’s stopping oil exports in January 2020 had on the market availability of tankers and the rates. You can track the vessel supply and market rate over a period of time. You can see what impact VLLCs being used for storage had on the daily rates.

 

The service covers VLCCs, Suezmaxes and Aframaxes. It is in beta testing to expand the product for large bulk carriers, from Capesize to Panamaxes.

 

The software is used by brokers, charterers and shipowners. Because each company has access to a different set of information, the model is built individually for each, based only on information they have. So it can build a model based on e-mail lists they are included on, their internal data, and public data, such as AIS reports.

 

The software was originally developed for the company’s own use, doing commercial management for a pool of Aframaxes.

 

Today, there are 72 clients paying for the service. 

 

A list of clients is online at https://www.signalocean.com/#companies – prominent tanker operators and charterers mentioned include AET, Chevron, ConocoPhillips, Delta Tankers, Stolt, Dynacom, Equinor, ExxonMobil, Frontline, Heidmar, Lukoil, Nordic American, Olympic, OMV, Philips66, Prime, Sinopec, Sovcomflot, Teekay, Thenamaris and Trafigura.

 

The company says it recently “onboarded” another oil major and is in discussion with another (although is unable to mention the names).

 

Reducing e-mail load

The first task the software does is automatically ‘reading’ e-mails, so charterers don’t have to read them all.

 

People working in vessel chartering communicate their needs and availabilities by bulk e-mail. “The average chartering professional might get 4,000 e-mails per day which is mind boggling,” says Dimitris Tsapoulis, chief Operating Officer, Signal Group.

 

For example, consider if a shipowner is contacted by a charterer on Friday evening looking for a vessel. The shipowner needs to consider whether the market rate is going up, because of a decreasing availability of vessels, and so should wait until Monday. Or maybe better to accept the cargo now.

 

If you decide to look carefully through your e-mails to read the relevant ones, then there can be another stream of more e-mails while you have done it, he says.

 

To understand if the market may go up or down, you need to (for example) make a list of all the vessels in the market located nearby, and cross them out when you see that one is fixed elsewhere and no longer in competition for this cargo. By the time that is done, another 150 e-mails have arrived.

 

Chartering managers can find themselves looking at multiple screens and taking multiple phone calls, with charterers seeking urgent vessels for transport or storage.

 

“You are trying to make head or tails out of what’s happening,” he said.

 

The e-mails include fixture reports (reports of vessels contracted for carrying a cargo), position lists (of vessels required) and tonnage lists (of vessels available).

 

These e-mails are often written in a standardised language, developed in the days of Telex and high costs per character sent, which makes it possible to program a computer to ‘read’ them.

 

For example a few words communicate that a certain vessel is likely to be chartered by someone for a certain trade, loading at a certain date, for a certain cargo, for a certain price, and whether the contract has been signed.

 

The computer aims to convert this standard language into a table of vessels in the market, cargoes looking for vessels, port lists and fixtures.

 

The company claims that its system accuracy at reading these e-mails, detecting and extracting the relevant data, is now over 95 per cent, based on a proportion of e-mail rows containing data which are successfully read.

 

The screen shot shows an example. From a broker e-mail inbox, the computer thinks it has found a certain number of vessel positions, cargoes available, information about fixtures, and “line ups” – vessels scheduled to arrive at certain berths or terminals.

 

Integrating the data

But the real strength of the offering happens when the data is combined with other data to forecast vessel availability.

 

Based on AIS data (available as a feed by license), it can know where all the ships in a certain market (such as Aframaxes) currently are, their destination and their position history.

 

That is not so helpful by itself, but it can be used to build up a more useful picture, when the vessel will be available for another cargo and where it will be at that point.

 

A charterer can find the answers to questions like “which Aframax vessels can be in Ceyhan within 10 days, and are available for charter”. Ceyhan is a terminal in the Turkish Mediterranean operated by BP, connecting to the Baku–Tbilisi–Ceyhan (BTC) pipeline.

 

This list can be further reduced with a mixture of digital and human expertise, such as looking for ships which have been advertised in the market, ships that can wait a day before loading, ships which have a status with the relevant charterers, ships under a certain age.

 

You can see how many ships are on “subs”, as brokers say, which means that negotiations have been completed, the vessel has been reserved for the fixture, but the final contract or ‘fixture’ is not completed. For example if you see 8 vessels are on “subs” today, but there have been 19 over the past few days, “you know the market is quieting down,” Mr Tsapoulis says.

 

It also tells you that the vessels not fixed or on ‘subs’ are available for charter.

 

Then you can do further analysis on these vessels still under consideration.

 

You can see how much profit each shipowner would make, based on a “Time Charter Equivalent” calculation, a shipping industry performance measure, based on a calculation of voyage revenues minus voyage costs, divided by the number of days of the round-trip voyage.

 

“Instead of ranking them by the time they arrive in the port, I’ve ranked them by who stands to have the biggest margin,” he says.

 

You can see a previous voyage and an estimation of how much profit or loss was made.

 

Shipowners can use this to compare their competitors’ performance, for example they may see that a company is operating an “eco ship” with higher fuel efficiency and making more money that way.

 

It can assess the merit of the full commercial voyage, including moving the ship from where it finished the previous voyage to where it will collect the next cargo. So clients can get a full understanding of whether a cargo will be profitable to take.

 

“You can do all this without reading 1000 e-mails,” he says. “You can have it all on your phone.”

 

Brokers

Mr Tsapoulis emphasises that the service is not intended to disintermediate brokers, but to give market participants better tools – in the same way that real estate market players have a range of tools, but still use agents.

 

“Brokers are the information lubricants of the market,” Mr Tsapoulis says.

 

Brokers are finding this very useful in complementing what they do.

 

It could be a service entirely for brokers, who would then advise shipowners and charterers about opportunities – although it doesn’t hurt for all market participants to have this information, he said.

 

Pool management

The other part of Signal’s business called “Signal Maritime”, is managing a pool of 35 Aframax vessels.

 

“It is not a traditional pool, it is a pool that is very much focussed on achieving overperformance on TCE [Time Charter Equivalent earnings], so bringing a new value proposition to owners,” he says.

 

The company estimates that vessels in the pool earned an extra $2,000 per day compared to competitors.

 

Shipping companies can place ships in the pool just for a single voyage. “It is dramatically different to the average commitment that pools look for,” he says.

 

By joining the pool, other owners can gain the value of Signal’s technology without setting it up on their own systems.

 

Earnings from pool ships can be shared among participants of the pool.

 

Company background

Signal’s software was originally developed in 2014 as an in-house project at tanker operator Thenamaris. It was then spun out of Thenamaris as a standalone company, together with the 10 founding staff members. It was launched at June 2018 in Posidonia.

 

As of April 2020, the company employs 108 people, 60 on technology development, and 48 doing commercial management for a pool of Aframax vessels.

 

The CEO of Signal Maritime, Ioannis Martonis, is a former chartering manager of Thenamaris.

 

Until 2019, the system was limited to VLCCs, Suezmaxes and Aframaxes, but now it has data about the full merchant fleet of 35,000 vessels, including all tankers, dry bulk down to 25,000 tonnes, LNG and LPG vessels, and some expansion into containers. The dry bulk service is having a beta release, covering capes to panamaxes.

 



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