Citing “unprecedented market conditions” Maersk Supply Service has announced it will slash its OSV fleet by up to 20 vessels over the coming 18 months.
“The divestment plan is a response to vessels in lay-up, limited trading opportunities and the global over-supply of offshore supply vessels in the industry,” the company said in a release.
The first ten vessels are expected to exit the fleet by the end of this year and will likely push the price of OSVs down even further.
“One of Maersk Supply Service’s prime objectives is to attempt to restore the supply demand balance in the offshore supply market. This is why the vast majority of the divested vessels will be recycled or modified by their new owners to compete outside their present segments,” said CEO of Maersk Supply Service, Jørn Madsen.
Maersk Supply Service will flag its four ‘Stingray’ newbuildings to the Isle of Man registry. A commercial hub will be established in the United Kingdom consolidating ownership and operation of the company’s project vessels. This includes the Stingray vessels and five existing project vessels that will also be flagged to the Isle of Man registry.
As a consequence of the fleet reduction and the flagging of existing project vessels to the Isle of Man registry, around 400 crewmembers will be made redundant.
“We are facing unprecedented market conditions, and regrettably we have to further adjust our crew pool. It is an unfortunate, but necessary step to safeguard the future of our company,” Madsen said.
Speaking exclusively with Splash, Madsen said today: “The present supply-demand gap is expected to widen in the coming year and OSV utilization is expected to decline. This will lead to increased oversupply of tonnage in the OSV segment. It is one of our prime objectives to attempt to restore the supply demand balance in the offshore supply market. This is why we are divesting up to 20 vessels from our legacy fleet over the course of the next 18 months. The vast majority of our divested vessels will be recycled or modified by their new owners to compete outside of the OSV market.”
Commenting on the news, Mike Meade from Singapore offshore brokers M3 told Splash: “It’s not surprising given the fleet portfolio and age profile. They also a have a sizeable newbuild fleet of AHTSs and subsea support vessels to absorb.”
Meade continued: “Maersk Supply have typically never followed the herd and have made moves counter cyclically. Although exposed to the reality of a low oil price they operate a cut above most of their peers operationally so the impact on them is not as stark as the more commoditised players.”
The redundancies will be completed by the end of September.