The costs of taking offshore supply vessels out of cold layup has proven to be far more expensive than originally forecast, leading more ships to head for recycling, a new report from Fearnley Offshore Supply has highlighted.
The OSV market in general is on the way to recovery with fundamentals improving and a decent rebound during the summer season, the Fearnley report suggests.
In the North Sea region, owners of large PSVs experienced rate and utilisation levels last seen at this time of the year in the early part of the decade.
On higher volumes of OSVs heading for scrap, the offshore analysts noted: “It turns out that budget figures for reactivating cold stacked OSV have been gravely underestimated and we are now seeing a clear bifurcation between owners keeping their vessels active and paying the cost of maintenance and classing, and those who went into full cost saving mode.”
This has also started to impact the S&P activity lately. The first quarter saw a far more moderate number of S&P sales concluded comparing with the all time high volumes in 2017 and 2018 with a large part of the fleet on their third and fourth year in layup.
“The added and often unknown costs of picking up distressed assets now more clear, speculative buyers have adopted a more cautious approach to the industry. Nonetheless there is still considerable S&P activity, and it is good to see that the number of ships sold to recycling remained high during the last quarter,” the report stated.