Overseas Shipholding Group, Inc. and its wholly owned subsidiaries (OSG) own and operate a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the U.S. Flag trade.
As of December 31, 2023, the company owned or operated a fleet of 21 vessels totaling an aggregate of approximately 1.5 million deadweight tons (dwt). OSG primarily charters its vessels to customers for use over specific periods of time at fixed daily amounts contractually established thro...
Overseas Shipholding Group, Inc. and its wholly owned subsidiaries (OSG) own and operate a fleet of oceangoing vessels engaged in the transportation of crude oil and petroleum products in the U.S. Flag trade.
As of December 31, 2023, the company owned or operated a fleet of 21 vessels totaling an aggregate of approximately 1.5 million deadweight tons (dwt). OSG primarily charters its vessels to customers for use over specific periods of time at fixed daily amounts contractually established through time charters. OSG also charters its vessels for specific voyages at spot rates. Spot market rates are highly volatile due to market forces, including local and worldwide demand for the commodities carried, volumes of trade, distances that the commodities must be transported, the amount of available tonnage at the time such tonnage is required and over the period of projected use, and the levels of seaborne and shore-based inventories of crude oil and refined products.
The company actively manages the size and composition of its fleet through opportunistic acquisitions and dispositions of vessels. The company considers timely and selective acquisitions of high-quality secondhand vessels or new-build contracts.
Strategy
The key elements to the company’s strategy are to combine the predictability of fixed time charter and contract revenues with opportunistic trading in the spot market; actively manage the size and composition of its fleet; emphasize the quality of its operations and adhere to the highest safety and environmental standards attainable; and seek opportunities to increase scale.
Customers
OSG’s customers include major independent oil traders, refinery operators and U.S. and international government entities. The company’s top customer comprised 14.3% of shipping revenues during the year ended December 31, 2023.
Fleet Summary
As of December 31, 2023, OSG’s operating fleet consisted of 21 vessels, 13 of which were owned, with the remaining vessels chartered-in. Vessels chartered-in are on Bareboat Charters.
On January 27, 2023, the company’s one owned Marshall Island flagged non-Jones Act MR tanker, the Overseas Sun Coast, was officially documented as a U.S. Flag vessel, joining the rest of the company’s U.S. Flag fleet.
Commercial Management
Time-Charter Market
The company’s operating fleet includes a number of vessels that operate on time charters. Within a contract period, time charters provide a predictable level of revenues without the fluctuations inherent in spot-market rates. Once a time charter expires, however, the ability to secure a new time charter may be uncertain and subject to market conditions.
Spot Market
Voyage charters and COAs constituted 20% of the company’s shipping revenues in 2023. Accordingly, the company’s shipping revenues are affected by prevailing spot rates for voyage charters in the markets in which the company’s vessels operate. Spot market rates are highly volatile due to market forces, including local and worldwide demand for the commodities carried (such as crude oil or petroleum products), volumes of trade, distances that the commodities must be transported, the amount of available tonnage both at the time such tonnage is required and over the period of projected use, and the levels of seaborne and shore-based inventories of crude oil and refined products.
Business Segment
The company has one reportable business segment. OSG’s U.S. Flag fleet consists of Suezmax crude oil tankers doing business in Alaska, conventional and lightering ATBs, shuttle and conventional MR tankers, and non-Jones Act MR tankers that participate in the TSP or are on time charter to MSC. In January 2023, the Overseas Sun Coast was converted to U.S. Flag status, joining the rest of OSG’s U.S. Flag fleet. In November 2023, the company purchased the Alaskan Frontier from BP Oil Shipping Company USA. OSG is in the process of reactivating the 1.3-million-barrel capacity tanker which has been in cold layup in Malaysia since 2019. OSG plans to make significant investments in the vessel for it to begin commercial trade by the fourth quarter of 2024. Under the Jones Act, shipping between U.S. ports, including the movement of Alaskan crude oil to U.S. ports, is reserved for U.S. Flag vessels that satisfy Jones Act requirements, including requirements that vessels be constructed in the United States and owned by companies that are more than 75% owned and controlled by U.S. citizens. OSG is one of the largest commercial owners and operators of U.S. Flag vessels and participates in U.S. government programs, including the following:
MSP—Two of the company’s reflagged U.S. Flag Product Carriers participated in the MSP during the first quarter of 2023. These two vessels were then accepted into the TSP in April 2023. The MSP is designed to ensure that privately-owned, military-useful U.S. Flag vessels are available to the U.S. Department of Defense in the event of war or national emergency. Each of the vessel-owning companies receives an annual stipend, subject to annual congressional appropriations.
TSP— In April 2023, three of the company’s vessels were accepted into the TSP, which consists of 10 tankers. The program is designed to ensure that militarily useful U.S. Flag tank vessels are available to the U.S. Department of Defense in the event of war or national emergency. TSP participants receive an annual stipend designed to allow them to compete for international business. The company transferred the two non-Jones Act U.S. Flag Product Carriers participating in the MSP to the TSP and added the Overseas Sun Coast to participate in the program.
In June 2023, MSC awarded the Overseas Mykonos, which was a TSP participant, a time charter to provide ongoing fuel transportation services to MSC in support of the company’s nation’s defense. The time charter awarded is for a one-year base period with the MSC holding additional option periods to extend the contract out to a maximum period of five- and one-half years. The Overseas Mykonos was then transferred out of the TSP and delivered to MSC in August 2023.
Technical Management
OSG’s fleet operations are managed in-house. In addition to regular maintenance and repair, crews onboard each vessel and shore side personnel must ensure that the company’s fleet meets or exceeds regulatory standards established by the IMO and USCG.
Environmental, Safety and Security Matters
OSG’s vessels are registered in the United States and are subject to the jurisdictional and regulatory oversight of the USCG (under various protocols and agreements covering certain statutory survey and certification functions). OSG is also subject to compliance with several other U.S. government agency regulations, including the Environmental Protection Agency (‘EPA’), the Maritime Administration of the U.S. Department of Transportation, and the United States Customs and Border Protection Agency. OSG vessels are classed with the American Bureau of Shipping (‘ABS’) and are subject to the requirements of the Classification Society.
In addition, a variety of governmental and private entities subject OSG’s vessels to both scheduled and unscheduled inspections, including the USCG, local port state control authorities, flag states, coastal states, Classification Societies, major oil companies and petroleum terminal operators. Under IMO (International Maritime Organization) ) regulations, OSG has adopted Shipboard Oil Pollution Emergency Plans, including periodic training and drills for response personnel and for vessels and their crews and Shipboard Marine Pollution Emergency Plans, which cover potential releases not only of oil but of any noxious liquid substances.
OSG vessels are equipped with Marine Sanitation Devices compliant with regulatory requirements for each type of vessel. The U.S. Clean Air Act (‘CAA’) requires the EPA to promulgate standards applicable to emissions of volatile organic compounds and other air contaminants and requires states to draft State Implementation Plans (‘SIPs’) designed to attain national health-based air quality standards in major metropolitan and industrial areas. The Delaware Department of Natural Resources and Environment Control monitors OSG’s U.S. Flag lightering activities within the Delaware River through Title V of the Coastal Zone Act of 1972. OSG is the only marine operator with a Title V permit to engage in lightering operations. The regulations are designed to reduce the number of VOCs entering the atmosphere during a crude oil lightering operation through the use of vapor balancing. OSG’s Delaware Lightering fleet is 100% vapor balance capable. OSG’s SMS contains procedures for the safe operation of its vessels, reporting accidents and non-conformities, internal audits and management reviews and responding to emergencies, as well as defined levels of responsibility.
History
Overseas Shipholding Group, Inc. was founded in 1948. The company, a Delaware corporation, was incorporated in 1969.
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