London (Platts)--26Apr2012/559 am EDT/959 GMT

Clean freight rates for cargoes loading in Northwest Europe and discharging in West Africa are higher than for cargoes discharging in the US Atlantic Coast, Platts data shows, with shipping sources saying Thursday this is due to fears of piracy.

Freight rates for these two routes tend to be in-line with each other as both have regular arbitrage flows for gasoline and gasoil.

Shipping sources have cited "the drifting clause" as the reason for higher rates for cargoes discharging in West Africa. Drifting is a term for vessels waiting offshore instead of staying at anchorage in port. Due to fears of attacks of piracy at certain ports in West Africa vessels are more likely to drift than risk a possible attack. When vessels drift they continue to burn bunker fuel and owners want to be compensated for the expense, sources say this is the cause of the wide difference in rates in comparison to Trans-Atlantic rates rather than an increase in cargoes.

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Freight rates for a vessel carrying clean cargoes from NWE to West Africa were assessed Wednesday at Worldscale 185, basis 30,000 mt cargoes, a w5 day-on-day drop from Tuesday when rates were at w190. Freight rates for NWE to USAC cargoes were assessed Wednesday at Worldscale 138, and sources continued to peg rates at this figure early on Thursday.

Although rates may be dropping off for NWE to West Africa there is still a premium of w47 for NWE to West Africa rates to those to USAC.

"The drifting clause is nothing new. Some charterers don't want to fix ships that drift 60-100 nautical miles offshore. Some owners are happy for their vessels to wait closer to shore. So the companies that are happy to fix vessels for West African discharge can now charge a slight premium, as there are fewer vessels available and they will have to pay the owners for the extra bunker fuel burnt. Some charterers argue that they won't fix the vessel or pay the extra bunkers, which makes things difficult," said a shipowner.

Currently there is a shorter position list for West Africa-bound cargoes as generally oil majors cannot fix their own vessels there due to ship-to-ship rules, sources said. "What you are left with is fewer players for West Africa than for trans-Atlantic," said the shipowner.

Freight rates for vessels discharging in the US have been falling in the past few weeks due to poor arbitrage economics for gasoline cargoes. A charterer working the trans-Atlantic market said: "Rates are currently at w135-138 for 37,000 mt cargoes but there is little activity. I believe activity will pick up soon as the driving season is due to start and with the closure of the East Coast refineries there should be increased activity in the coming month," said a second shipowner.

--Angela Velasco, angela_velasco@platts.com

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