Shipbroker Intermodal cautions of continued vessel repair hesitance in 2022
Volatile market conditions resulted in many shipowners hold back their maintenance and retrofits for fear of losses. While the uncertain prices are expected to ripple its way into 2022, it is still a lucrative period for some yards.
Delayed maintenance has aftermaths
Many shipowners wished things improved to pre-pandemic levels, but it would be a long path to recovery. On the flip side, the bullish chartering market may have contributed to shipowners preferring to scoop up as much revenue as possible since rates are in their favour.
However, when vessels are herded to accept as many chartering orders as possible, the risk of another bottleneck at repair yards would be the next concern. According to Intermodal’s Vassilis Vassiliou, ongoing border restrictions made owners reluctant to firm their vessel repairs in advance. Others made multiple bookings to have more options available to cover the unforeseen – shrinking available options. Unfortunately, such maintenance decisions resulted other ships wind up with very limited options for repairs. That leads to opportunistic yards’ taking on more than they can handle.
When yards accept more jobs, manpower shortage shows up. Another challenge to be prepared for would be hiked rates, from “approachable” yards. Combine all these factors and the final result would be bottlenecks – there are enough work to go around but insufficient yards to take on them. When price gouging happens, relationships between shipowners and yards become strained.
Vassiliou added, “Customers’ expectations also differ from sector to sector. Bulk carriers and container vessels owners are willing to pay more for their repairs to yards they are familiar with for reliability. However, they do not want to risk their vessel to delay from the agreed repair time. Tankers instead are looking into options which make them deviate the minimum from their trading areas; highly price sensitive with many competitors having severe cash flow difficulties.
“Over the past few years, shipping encountered new regulations which created the necessity of “new retrofits”, and increased the burden on ship repairs. The requirement for retrofitting ballast water treatment has been ongoing for the past 5 years and expected to intensify over the next 2. The requirement for 0.5 per cent sulphur of marine fuels in scrubber retrofits has been ongoing for the past 2 years. We expect more retrofits to become the yards’ routine which further pressure the sector.”
Marine Online Media Team
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