A ship owners decision to lay-up ships

Size: px

Start display at page:

Download "A ship owners decision to lay-up ships"

Patience Singleton
7 years ago
Views:

1 A ship owners decision to lay-up ships By Shaun Long B.App.Sc (Maritime Technology Management) 16 th November

2 Background > The financial crisis has seen amongst others > Consumer spending reduce > Needs for shipping has reduced. > Market rates have drastically reduced due to supply/demand un-equilibrium > Financial lending has reduced > Impacts consuming spending > Impacts cash flow > Orderbook spending spree. > Last couple of years there has been a large influx of new-builds including a large quantity of VLCCs. > Supply of vessels far exceeds current demand > Further compounded by orderbook > Owners/Operators need to respond to the current crisis > Focus on survival 2

Impacts cash flow > Orderbook spending spree.

3 Owner/Operator relationship > Owner/Operator used throughout presentation. > Owner is responsible for the asset. > Operator is the one using the vessel and generally the one making the initial decision. > If a vessel is chartered from an owner the operator may wish to lay-up the vessel. > In many cases charter-parties will have a lay-up clause. > Owner will ensure to protect the asset. > Operator wants to have lay-up with greatest savings, greatest flexibility. > Over time more vessels will be redelivered to owners > No matter, owner/operator need to work together with lay-ups. 3

> If a vessel is chartered from an owner the operator may wish to lay-up the vessel. > In many cases charter-parties will have a lay-up clause.

4 The initial decision To lay-up or not to lay-up? > The decision of laying up a vessel fundamentally means accepting no revenue and minimising the losses from the asset. > Owner/Operator activities > Liner service: Longer term view. Able to plan future services. > Tramp: Spot market, difficult to plan for intermediate/long term future. > Owner/Operator strategy > Dispose of old fleet through scrapping/recycling. > Remove market capacity, lay-up to save expenditure, ensure cost/revenue position. > Responding to market conditions. > Owner/Operator fleet size > Depending of the mixture of the vessel and the size of its segments. > The emotional aspect > We have to lay-up ships it just feels like we are giving up 4

> Owner/Operator strategy > Dispose of old fleet through scrapping/recycling. > Remove market capacity, lay-up to save expenditure, ensure cost/revenue position.

5 We need to lay-up but what's next? > The initial decision is often the hardest but opens the door to a significant amount of planning and more decisions How long? What vessel? Lay-up (Y/N) Lay-up method Strategy? Where? 5

6 What vessel(s) to lay-up? > Depending on fleet size/exposure owner/operator can have choice in which vessel to lay-up > Highest consuming vessels reducing cost exposure on network > Old vessels less technically challenging > Vessels due to dry-dock Can be postponed if in agreement with classification society. > Sister vessels to allow easier rafting scenarios and easier to maintain > Owned vessels more control on the lay-up. 6

consuming vessels reducing cost exposure on network > Old vessels less technically challenging > Vessels

7 What type of lay-up? > There are differing views of what is a hot/cold lay-up. > Definitions: The extreme's > Hot Lay-up: Heating to engine and electronics. Non essential systems shut-down. Crewing reduced to minimum safe manning. > Cold Lay-up: Vessel is a dead ship with watchman and maintenance scheme. No heating to engine & electronics. > Sliding scale between hot lay-up and cold lay-up. > Semi hot / Semi cold lay-ups. > Inversed scale between cost(s) and reactivation time > What is the core strategy. > Maximum cost reduction > Quickest reactivation > Cost/flexibility Cost(s) Reactivation time Hot Cold 7

> Cold Lay-up: Vessel is a dead ship with watchman and maintenance scheme. No heating to engine & electronics.

8 Where to lay-up? > What location do I need for my strategy? > Closer to market? > Respond quicker? > Hot lay-up can generally be done in most locations. > If cold, is the location suitable? > Sheltered & secure? > What are the bottom conditions? > What are the prevailing weather conditions? (inc. Humidity). > What is the water temperature? > What is the ability to raft? > Where does the vessel become idle? > Can I execute my chosen lay-up strategy or does this need to be revised? > What is cost of positioning? Can I find something in the market to position the vessel? > Are there any other considerations? 8

Humidity). > What is the water temperature? > What is the ability to raft? > Where does the vessel become idle?

9 Can we do it ourselves? > Some owner/operators are reluctant to handle lay-up. > Takes a significant amount of planning. > Need to involve flag, classification society, port authorities, makers, and insurance underwriters early in discussions/planning. > Third party lay-up (turn-key solutions) are available but come at a price. 9

> Need to involve flag, classification society, port authorities, makers, and

10 Thank-you for having me. Questions? 10

Managing risks for lay-up of OSVs and Rigs

MARITIME ADVISORY Managing risks for lay-up of OSVs and Rigs 2015.10 1 DNV GL 2013 2014.03.05 SAFER, SMARTER, GREENER Lay-ups are cyclical, just like the industry 2 Managing risks of lay-up of OSVs and