MARCH 27, 2018 — VesselsValue reports that operators of offshore service vessels are beginning to scrap an increasing number of older vessels, with year-to-date scrapping rates increasing by 153 percent on the same period of last year.
VesselsValue’s Head of Offshore, Charlie Hockless, says that owners’ reluctance to scrap is that, prior to the 2015 market downturn, these debt free older vessels were able to get work on a fairly regular basis, and were a cashflow generator for owners.
“The abrupt way in which the offshore party ended in 2014/15 meant that due to their aforementioned earning power, owners have many now idle old OSVs on their books,” says Hockless. “No one knew the downturn would be so severe, but analysts and market commenters were quick to point to the high number of these older vessels as one of the principle problems with the overall market.”
As the severity of the downturn increased and the likelihood of these older vessels returning to work began to diminish, says Hockless, “owners have slowly come round to the importance of scrapping these vessels. So far in 2018, 43 OSV vessels have been sold for scrap. In the first three months of 2017 only 17 vessels were sold. This increase shows owners are biting the bullet and realizing that if they are to survive these poor market conditions, they need to think of the future market rather than the market of the past.”
According to VesselsValue, Tidewater is at the top of the scrapping leaderboard selling 13 vessels for scrap in 2018.
Just to put things in perspective, the 43 vessels sold for scrap this year is a small percentage of the world total fleet of some 3,500 vessels of which around 1,200 are in lay up.