Shiprepair (“http://www.bharatbook.com/
With most shipping companies cash-rich and global demand for shipping high, shiprepair yards have little to worry about in the short to medium term. Or have they?
Drivers and influences on shiprepair demand
The ship conversion market
Shiprepair facilities – the supply side of the equation
Shiprepair and maintenance costs and economics
Industry issues Shipyard agents
This ought to be a healthy time for shiprepairers...
Owners lately have been more concerned with minimising off-hire time than repair costs
Owners have working vessels to the maximum and deferred class-dictated repair time to maximum permitted time allowances
Voyage repairs and other maintenance work may be being deferred to a later date
Newbuild prices are high potentially creating increased demand for ship conversions
But on the other hand...
The demand side of the equation, has not been typical in recent years particularly with high growth in China and India. Any economic downturns in China could spell disaster for most shipping sectors. Low levels of demolition coupled with fleets having to absorb high numbers of newbuilds.
Like all sectors, shiprepair is conditioned by the interplay of:
Demand
Supply
Underlying costs and economics
Market-affecting issues and external influences
Towards sustained business growth
Shiprepair looks back and projects forward with key insights and realistic predictions for the future for this sector including:
The core elements of demand with analyses of the dynamics that create a healthy, buoyant market for keeping vessels in a satisfactory condition
Factors affecting supply and whether there is any cause for optimism in what is a complex supply scenario
The costs, economic and geographic variables affecting operational budgets including R&M
Fleet or vessel specific risk management systems
Main findings
The shiprepair industry’s fortunes mirror those of the shipping industry - but with a time lag. This ought to point to healthy times for shiprepairers on the grounds that:
Owners have been concerned more with off-hire time (and its high opportunity cost) than merely securing the lowest possible repair invoice
Owners have been working their vessels to the maximum - and may have deferred class-dictated repair work to their maximum permitted time allowances
Higher than average voyage repairs and other minor maintenance may have been 'stored up' for dealing with later
Modern fleets, less maintenance
Some yards claim that they cannot recall the last time they were so busy in terms of occupancy or had so many months of forward stemmings booked. Some have talked of increases in value per contract. However, this may be overoptimistic, many fleets are now very modern and so the maintenance needs are much reduced.
Low demolition, high usage 2005-2006 has seen very low levels of ship demolition. The fleet’s veterans therefore have been continuing to find gainful employment – which implies they are being maintained for longer and, by implication, that late-life special survey-related costs are being recovered. The danger in this situation of high capacity is that any market downturn could hit yards hard. Shiprepairers need to have contingencies in place, as a matter of commercial expediency.
Supply side vs Demand side
There is a wider consensus that demand for shiprepair services is set to rise. As indicated, the general situation does seem unclear with reasons for optimism tempered with caution. Yard managers need to consider the factors affecting supply and plan accordingly.
Essentially, supply is being expanded significantly – mostly in China where repair yards will be hungry for market share. Yet Chinese repair yards appear to want to progress to newbuilding work. Supply in the Middle East is expanding and might create overcapacity in the region that could, in turn, work adversely for the wider shiprepair market.
Geographically distorted market
However, there are insufficient large vessel facilities for vessels limited to trading in the Atlantic / Western hemisphere. As supply is more static, this could be the shiprepair industry's 'trump card'.
The elements of demand
Demand for repairs is governed by the physical needs involved in keeping a vessel in a satisfactory condition; the number of ships in the fleet; and the health of the shipping market. Crucially, all of these elements are subject to variation and tend to be in a state of flux. Perceptions, consensus viewpoints, sentiment and rumour, speculation and ever changing market reactions all add to the highly complex
environment from which the shiprepair industry seeks to secure its customer base.
Looking to the future, the most important of these in terms of owner / manager: shipyard relationships is likely to be the level to which owners / managers develop their company, fleet or vessel specific risk management systems. Shiprepair throws light on how yard owners and managers can keep all the balls in the air and their customers happy.
For more information kindly visit : httphttp://www.bharatbook.com/
bharatbook.com, a leading information aggregator, facilitates and supports the business information needs for market research , corporate / strategic planning by providing the latest information in the form of reports, journals, magazines and databases on varied industries like automotive, oil and gas, shipping, textiles, pharmaceuticals, energy, banking, finance, insurance, risk management, country intelligence, consumer & durable goods, chemical and more. With over 90,000 reports, you can get instant access and insights on the studies in your areas of interest. Contact us at +91 22 27578668 / 27579438 or email info@bharatbook.com or our website www.bharatbook.com
