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A Year of Challenges for Ship Repairs

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Herons Logistics

The ship repair sector, ever so important, due to the need not only for maintenance but also retrofits, has experienced another challenging year. In its latest weekly report, shipbroker Intermodal said that “moving towards the end of 2021, the ship repair sector ends up unfortunately with the same uncertainty we had while ending the previous year. Of course, the market is more familiar with the raising difficulties and prepared to manage the pandemic but at the same time, it is far from the “normalcy” we knew 2 years ago. After the massive postponements on scheduled dry-dockings given by flags and classification societies during this year, together with the expected uptake on BWMS retrofits, seems like the year to come will be a relatively busy one for the ship repair market but with very few Owners planning their repairs long ahead due to the market uncertainty”.

According to Intermodal’s Vassilis Vassiliou, from Interyards, “due to the ongoing regulatory changes related to COVID19, Owners are very reluctant to firm their vessels way in advance. This is a trend we believe will apply in 2022 as well. Some Owners also adapted practices where they make multiple bookings to have plenty of options available to cover the unforeseen. Unfortunately, this slow decision making on fixing the vessel has resulted in some cases vessels to end up with very limited options for repairs and some opportunistic yards to end up with more vessels than they can handle. The ongoing travel restrictions in some countries and particularly in China seems to be the main problem our sector is going to face, since most of the Greek Shipowners have a great preference for their own personnel to attend their drydocks and retrofits”.

Another challenge which the ship repair market must overcome is the sharp increase in raw materials and logistic costs. And in addition to that, the general manpower shortage, a phenomenon noticed worldwide. Consequently, increased costs are a standard norm around the world, which resulted in a general increase of shipyards’ tariffs worldwide. On the other hand, this increment is not equal across the board, since the unequally applied regulations have resulted in those “easily approached” shipyards to increase their prices and those under strict regulations to try to adapt a more attractive pricing. The bottom line is that yards become more expensive, but at the same time their profit margins are pressured. A paradox which is creating a negative feeling to both sides, Owners and Shipyards”.

“Finally, taking into consideration also the current freight market across vessel types, Customers’ expectations differ from sector to sector. Bulker and Container vessels Owners are willing to pay more for their repairs and to target more competent yards. But they do not want to risk their vessel to delay from the agreed repair time. On the contrary, Tankers are looking into options which make them deviate the minimum from their trading areas; very much price sensitive and with many players having severe cash flow difficulties. Over the past few years, shipping came across new regulations which have created the necessity of “new retrofits”, that have increased the burden on the ship repair sector. Some of them, like the requirement for retrofitting Ballast Water treatment has been ongoing over the past 5 years and expected to intensify over the following two, while the requirement for 0.5% sulphur of Marine fuels that resulted in scrubber retrofits has been ongoing over the past two years. Similarly, we expect more “new retrofits” to become the yards’ routine which will add more challenges to the sector”, Mr. Vassiliou concluded.

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