Large-scale OSV lay-ups not enough to stabilise market

Speaking at Marine Money in Singapore Fazel Fazelbhoy, ceo of Synergy Offshore noted some Norwegian owners have 30% of their fleets laid-up. “This still hasn’t stabalised the market,” he said.
To make things worse he said there were another 400 vessels poised to be delivered.

Outside of the Middle East utilisation rates are down to around 60% and day rates are also down by 30%, and in some cases in the PSV sector as much as 60% lower.

“The only bright spot has been the Middle East.” Fazelbhoy said that the top five owners in the UAE were still boasting utilisation rates of 90%, however, rates were down 30%.

He also warned that the length of contracts was no longer meaningful. “Today a five year contract for an OSV means nothing – it's a one year contract.”

With conditions so poor asset values are also falling. Observing as an owner in other sectors of shipping, Graham Porter ceo of Tiger Investment, drew a grim parallel with what has happened in container shipping in the past. “Personally I bet asset prices in offshore will go to 10% of the newbuilding price as that is what happened in containers,” he stated.

Not surprisingly some owners are expected to face financial difficulties and Simon Spells, senior associate with Berwin Leighton Paisner, said “certainly there will be some restructuring”.