UK: Drewry Maritime Research Ltd Releases Ship Repair and Maintenance Market Report

Expanding repair capacity, stagnant ship maintenance budgets and price hikes in raw material costs are likely to obviate any market uplift the shiprepair sector might envisage from a growing global fleet, states a major new report on the sector.

In its Shiprepair 2011-2012 market outlook, UK-based consultant Drewry Maritime Research says “the next two or three years will be interesting for the shiprpepair market as it strives to avoid the gloom times. Certainly, the market has shifted from those halcyon days prior 2008, when yards could pick and choose what work they took on“.

For instance, the report points out that the recent low prices for steelwork replacement quoted ‘smacked of desperation’ and are completely unsustainable. It also says that despite the slight market upswing since the freight rate collapse of 2008, many shipowners are still in ‘minimum-maintenance mode’ and will only commit to doing what is absolutely necessary.

Slashing maintenance costs is expected to remain a priority for shipowners for sometime, especially if the world dips once more into recession, as some economists suggest it will.

Anything other than special surveys, mandatory work and unavoidable steelwork will almost certainly be deferred until the market recovers. And even if fleet growth continues, the level of shiprepair activity is unlikely to return to the dizzy heights of 2008 until after 2015.

Another dynamic that weighs heavily upon the shiprepairer is the prospect of additional repair capacity coming on stream, which would of course negatively impact the sector’s market fortunes.

Two major new sites have opened in Qatar and Oman, and the Turkish repair sector is expanding because of the increasing trend for newbuilding yards to diversify into shiprepair – rather than close – as the market dictates.

But it is Chinese capacity that could deliver the knockout blow to some shiprepairers, particulalry in the West, where labour costs are higher. As the pace of China’s shipbuilding expansion slows down and orders dry up, many more of China’s newbuild yards are expected to move into shiprepair, states the report.

[mappress]

Source: imarest, September 9, 2011;