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Offshore: shipping’s not quite so easy panacea

Offshore: shipping’s not quite so easy panacea
At this week’s Sea Asia Offshore Marine Forum, Seatrade’s chairman Chris Hayman observed that at many shipping businesses he has visited over the last two years, sooner or later someone says, “oh you must meet our new head of offshore”.

With the main sectors of general shipping mired in overcapacity offshore has quickly become the new buzzword. In particular offshore vessels look like ships “so hey we should be able to that”. Well it is probably not that simple. While merchant ships trade the world’s oceans, a business that has many attendant difficulties, as it was put to me some time back, sailing a vessel from point A to point B is one thing, but keeping it stationary next to an asset on a $500,000 day rate is whole different ballgame.

The two-day Offshore Marine Forum organised by Seatrade and the Singapore Maritime Foundation revealed that offshore really is perhaps not quite the panacea it seems to be for shipping and also the Chinese shipbuilding industry.

Coming back to the previous point on keeping an asset stationary at sea, this involves having crew with dynamic positioning (DP) training. Just like for example LNG carrier officers, they are not that easy to find, and as a result not only are pay rates rather high, but you can also end up with bizarre demands for four chocolate bars a day it seems.

It has got bad enough that according to one insurer, one client found that spending vast amounts of money on unmanned equipment offshore Australia to guard against cyclones, was easier, and presumably less costly, than hiring an FPSO and then having to deal with marine unions.

But despite those difficulties shipowners used to the industry’s rampant cyclical nature have still been rather attracted to the pot at the end of the rainbow.

It is likely then there were a few long faces when DVB Bank’s Geir Sjurseth pointed out that the current thirty-four-year long upcycle for offshore might be coming to an end. A combination of cost pressures, overcapacity driven partly by the likes of private equity investment and increased risk are changing the market landscape after an unprecedented boom.

Offshore clearly presents many opportunities for shipowners but it also seems to be the case that they both need to know what they are doing in terms of operating in this market and understand the risks involved.