In-depth forecast for the repair industry

Drewry says that the traditional industry maxim is that the fortunes of shiprepairers mirror those of shipowners but with a time lag. So, it asks, could the current conditions mark a trough in the industry, allowing both owners and repairers to be cautiously optimistic about future rebounds? Even with anticipated fleet growth there are still many other factors that need consideration; this is where Drewry says it new Shiprepair Spotlight Report can provide answers.

The report says that the repair market has shifted from the peak of 2008, when yards could pick and choose work, to today’s far more competitive market. Many owners have gone into minimum-maintenance mode and will only commit to doing what is absolutely necessary. Fleet age and usage play heavily on the demand for shiprepair services, and Drewry offers a forecast for potential special survey docking demand for major fleets up to 2015. From this Drewry has identified the following issues:

• The rate of increase in core survey docking requirements will slow significantly over 2012-2014;
• Recent fleet expansion will make a significant impact in 2015;
• A potentially more difficult repair market and the need to win business from later-life surveys could push more work to facilities in China and Eastern Europe.

The report outlines the regulations that require retrofitting of vessels and legislation that is designed to govern scrapping. Each of these will place demands on repair yards and must be considered when assessing the industry as a whole.

In ship conversions, traditonally providing longer term contracts, the offshore market has dominated, with the focus on tankers being converted into FPSOs and FSUs. Singapore is leading the market in terms of securing contracts, but competition is still tough. The oil industry remains strong and with a continuing need to add to the FPSO fleet, and the report gives Petrobras’ programme for fleet development, totalling 10 projects from 2011-2014, as an example of current market activity.

A section on competitive and economic market influences explores at length a range of influences, starting with a budgetary overview by vessel type. Typical budgets are likely to constitute between 30-35% of the total operating cost. Overall repair and maintenance cost trends are forecasted through to 2015, when recent newbuilds will head for their first special survey. A ‘special survey verses scrapping’ evaluation is provided. Drewry believes that at present, 2011 is expected to see a significant rise in scrapping but this will be affected by new recycling conventions adopted by the IMO.

Ship yard costs are constantly changing, and because of this Drewry has individually addressed aspects including:

• Labour and manpower issues;
• Steel and steelwork costs;
• Painting, coatings and anti-fouling;
• Spares market;
• Exchange rates;
• Yard overheads and administration.

The report looks in depth at the market place, with over 70 regions and countries individually covered, with a detailed breakdown of individual yards facilities and capabilities including;

• Number and size of docks;
• Type of dock (graving, floating, shiplift);
• Lifting capacities.

The report is available for purchase and download through the Drewry website.