- Joined
- Jul 24, 2008
- Messages
- 33,627
- Points
- 0
<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published September 30, 2009
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Offshore supply vessel market still going strong
Key to profitability is type of business model used, markets the operator is in
By VINCENT WEE
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>
(SINGAPORE) The offshore supply vessel market is one of the few sectors in shipping that is relatively unscathed by the economic crisis and, although rate levels are returning to more normal levels after the 'frothy' years from 2006 to 2008, business can still be profitable if managed well, according to an industry panel at the Marine Money Asia conference yesterday.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Heyday over: Extremely high margins that owners got for having vessels available are gone, meaning a return to fundamentals such as safety, delivering good service </TD></TR></TBODY></TABLE>'The rates that we saw in the last three years were incredibly high and it was an incredibly profitable period for offshore supply vessel owners but what we're seeing now is a correction and a return to . . . prior to 2005 when you had to work hard to make money,' said Swire Pacific Offshore general manager George Horsington. 'The days of easy money are over, at least for the short term.'
He stressed that due to the increased competitiveness, the extremely high margins that owners got for just having vessels available are gone and it will mean a return to fundamental values such as safety and delivering good service.
Despite that, however, both owners and builders in the sector were not totally pessimistic of the future. The key to profitability is the business model employed and the markets you are in, said Topaz Marine & Energy CEO Fazel Fazelbhoy. Alluding to a Nike swoosh-shaped recovery, he said: 'I think it will be a gentle recovery; we've not seen the days of the best rates ever, there's still some pretty good rates to come, it depends on where you operate.'
Likewise with business models, there should be a good balance between playing the spot market and locking in long-term charters. 'Depending on which business model you use and which markets you operate in, there's actually some things to look forward to on the rates side,' Mr Fazelbhoy said.
He conceded, however, that there would continue to be pressure in the spot market through to 2010, although this would not lead to a collapse in rates. 'We do see pressure but there's also opportunity depending on the kind of tonnage you have.'
Mr Fazelbhoy noted that new tonnage still maintains a good price and good relationships with clients and strong safety records are also plus factors in tough times like these.
He also pointed out that the very few new orders placed since the beginning of the year combined with an ageing AHTS fleet should correct the supply side imbalance soon. 'I think that will equalise faster than the numbers indicate.'
In an earlier presentation, Pareto Group senior vice-president Christian Loken said that there was a looming oversupply situation with yet undelivered newbuildings accounting for about 30 per cent of the global fleet, although some deliveries are expected to slip due to credit and yard problems.
He predicted that '2010 will be another tough year for the offshore supply vessels'. However, he saw the market picking up in 2011 as the tailing off in fleet growth is coupled with higher exploration and production spending.
Greatship Global Offshore Services executive director Venkatraman Sheshashayee offered the view that the offshore domain should not be treated as a single market. 'It is a multiplicity of markets and business verticals and it is important to understand that slicing and dicing can make something which does not look very good much better.'
For example, there are specific vessel types that are extremely underbuilt, some markets which are underexploited and, with the right market intelligence and business approach, much higher than average returns can be achieved, he said.
Mr Sheshashayee singled out accommodation and warehousing vessels to cater to the increasing number of deepwater fields as possible opportunities. 'These are segments which I believe are going to be very important in the years to come especially in Australia (Gorgon field), the east coast of India and the Mexican sector of the Gulf of Mexico.'
Looking at trends and developments is also important to getting vessels employed, added Mr Horsington. For example, the increasing number of dynamic positioning (DP) rigs means that there will be a rising demand for DP vessels to cater to them. Likewise, the rising cost of fuel is causing operators to become more interested in fuel-efficient vessels.
</TD></TR></TBODY></TABLE>
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>Offshore supply vessel market still going strong
Key to profitability is type of business model used, markets the operator is in
By VINCENT WEE
<TABLE class=storyLinks border=0 cellSpacing=4 cellPadding=1 width=136 align=right><TBODY><TR class=font10><TD width=20 align=right>
</TD><TD>Email this article</TD></TR><TR class=font10><TD width=20 align=right></TD><TD>Print article </TD></TR><TR class=font10><TD width=20 align=right></TD><TD>Feedback</TD></TR></TBODY></TABLE>(SINGAPORE) The offshore supply vessel market is one of the few sectors in shipping that is relatively unscathed by the economic crisis and, although rate levels are returning to more normal levels after the 'frothy' years from 2006 to 2008, business can still be profitable if managed well, according to an industry panel at the Marine Money Asia conference yesterday.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>Heyday over: Extremely high margins that owners got for having vessels available are gone, meaning a return to fundamentals such as safety, delivering good service </TD></TR></TBODY></TABLE>'The rates that we saw in the last three years were incredibly high and it was an incredibly profitable period for offshore supply vessel owners but what we're seeing now is a correction and a return to . . . prior to 2005 when you had to work hard to make money,' said Swire Pacific Offshore general manager George Horsington. 'The days of easy money are over, at least for the short term.'He stressed that due to the increased competitiveness, the extremely high margins that owners got for just having vessels available are gone and it will mean a return to fundamental values such as safety and delivering good service.
Despite that, however, both owners and builders in the sector were not totally pessimistic of the future. The key to profitability is the business model employed and the markets you are in, said Topaz Marine & Energy CEO Fazel Fazelbhoy. Alluding to a Nike swoosh-shaped recovery, he said: 'I think it will be a gentle recovery; we've not seen the days of the best rates ever, there's still some pretty good rates to come, it depends on where you operate.'
Likewise with business models, there should be a good balance between playing the spot market and locking in long-term charters. 'Depending on which business model you use and which markets you operate in, there's actually some things to look forward to on the rates side,' Mr Fazelbhoy said.
He conceded, however, that there would continue to be pressure in the spot market through to 2010, although this would not lead to a collapse in rates. 'We do see pressure but there's also opportunity depending on the kind of tonnage you have.'
Mr Fazelbhoy noted that new tonnage still maintains a good price and good relationships with clients and strong safety records are also plus factors in tough times like these.
He also pointed out that the very few new orders placed since the beginning of the year combined with an ageing AHTS fleet should correct the supply side imbalance soon. 'I think that will equalise faster than the numbers indicate.'
In an earlier presentation, Pareto Group senior vice-president Christian Loken said that there was a looming oversupply situation with yet undelivered newbuildings accounting for about 30 per cent of the global fleet, although some deliveries are expected to slip due to credit and yard problems.
He predicted that '2010 will be another tough year for the offshore supply vessels'. However, he saw the market picking up in 2011 as the tailing off in fleet growth is coupled with higher exploration and production spending.
Greatship Global Offshore Services executive director Venkatraman Sheshashayee offered the view that the offshore domain should not be treated as a single market. 'It is a multiplicity of markets and business verticals and it is important to understand that slicing and dicing can make something which does not look very good much better.'
For example, there are specific vessel types that are extremely underbuilt, some markets which are underexploited and, with the right market intelligence and business approach, much higher than average returns can be achieved, he said.
Mr Sheshashayee singled out accommodation and warehousing vessels to cater to the increasing number of deepwater fields as possible opportunities. 'These are segments which I believe are going to be very important in the years to come especially in Australia (Gorgon field), the east coast of India and the Mexican sector of the Gulf of Mexico.'
Looking at trends and developments is also important to getting vessels employed, added Mr Horsington. For example, the increasing number of dynamic positioning (DP) rigs means that there will be a rising demand for DP vessels to cater to them. Likewise, the rising cost of fuel is causing operators to become more interested in fuel-efficient vessels.
</TD></TR></TBODY></TABLE>
