Ballast ‘price war’ poses shipping risk

Responding to fears of a price war raised in a previous article, Stelios Kyriacou, general manager for De Nora’s Balpure BWMS, noted that the demands of capex-sensitive ship owners are indeed intensifying price competition in the sector.

Kyriacou noted that there has been a “very real movement in the market” as the IMO’s installation deadlines draw closer. But despite suppliers’ focus on finding the right system, he reported that questions fielded by De Nora from owners and operators focused on price, rather than applicability or maintenance requirements.

“A low-cost ballast water treatment system with meagre operational availability would be a poor decision compared to a system that is a good fit to the ship’s operational profile but at higher cost,” he said. “Ship owners have mentioned lack of equipment choice at the shipyards but are not willing to pay the price difference for their first-choice equipment.”

Far from the price war benefitting owners, Kyriacou believes that there are multiple negative effects from increasing competition. These include predatory pricing aimed at eliminating competition – something he said is already apparent in shipbuilding markets, where domestic suppliers dominate newbuilding orders.

Price pressure could also drive manufacturers to make compromises on durability or efficiency, which could result in higher maintenance costs or greater energy demands for ship owners. Kyriacou warned of a ‘fit and forget’ mentality amongst squeezed suppliers, arguing that they could cut guarantees and service agreements in a bid to make systems more affordable.

“Ballast water treatment is a long-term consideration for vessels,” Kyriacou concluded. “If these costs aren’t built into the ballast water solution you’re installing, you’re looking at greater operational costs over the life of the system.”

De Nora is not the only BWMS supplier to voice concerns about an excessive focus on price from ship owners. The recently formed Ballastwater Equipment Manufacturers Association was created in part to offer independent guidance on selecting suitable systems and technologies.