Ship Repair Yards See Business Slowing Down After the IMO Decision to Provide a Two-Year Delay in the Ballast Water Management Implementation

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Ship-repair yards are facing yet another slowdown in their business. Besides the regular decline in business during the second half of each year, the recent vote by IMO to provide a 2-year leeway to the implementation of the Ballast Water Management Convention, which would otherwise cause a flurry of lay ups for retrofitting, has only added contributed to more slowdown. In its latest weekly report, shipbroker Intermodal, said that “observing the expected slow-down of the second half of the year in ship repair facilities and after a relatively packed first half, shipyards all round the world are again trying to feel up the empty drydock slots. The difference compared to a year ago is that they have already reduced a lot the permanent manpower and that subcontractors cost is already squeezed to maximum. Cost efficiency is maximized and they are not willing to sacrifice their sustainability against filling an empty drydock slot. Despite prices remaining very low, we are not reaching the record low prices of 2016, with the big players giving priority to big projects and moderate attention to the rest small repairs”.

According to Mr. Vassilis Vassiliou, Ship-repair Broker with Interyards S. A., “following the decision of IMO, in the beginning of July 2017, to postpone the ballast water system dates by two years, the recent slow-down in ship repair facilities is even more affected, with European summer holidays making the overall picture worst. However, a breeze of comfort was felt by Owners who now have considerably more time to investigate and decide how to react with the new upcoming regulations. The situation is clear, for vessels which will complete the 1st IOPP certificate within 2017 and 2019 that have to comply with Ballast regulations at the first MARPOL IOPP renewal survey after September 2019, which is a clear benefit of two years for all Owners. Excluded are the owners who tried to avoid the convention and proceed with de-harmonization before Sep 2017, who now might be thinking scenarios for a possible re-harmonization”, he said.

Vassiliou added that “based on the MEPC 71 approved implementation scheme, many existing ships are expected to de-harmonize their IOPP surveys between by mid-2019 in order to take advantage of the deadlines and delay the installation of the system as much as possible. Eventually, shipyards slot congestion can be forecasted for the same period five years later, around mid-2022. For the time being, enquiries from Owners to shipyards for ballast water treatment works significantly faded after the outcome of MEPC 71. Together also faded the hopes of the entire Ballast Treatment System industry, as the profits from their investment since the adoption of BWMC in 2004 will delay for an average of two more years”, the shipbroker said.

He went on to note that “it is important to highlight the difference approach of the USCG. The IMO decision does not apply to vessels calling USA ports, as the regulation of the USCG remains the same; vessels should install the system during the first dry-docking date after the implementation of the regulation, already in force. As long as owners benefit from the new scheme and the installation of systems is delayed, the problem with retrofitting shipyard space is only postponed and not solved. This seems contradictory, considering that global shipyards’ availability was one of the main reasons alleged from flag administrators for the two years postponement decided by IMO”.

“However, sooner or later Owners should install same ballast systems and they should be very carefully choosing the right one, bearing in mind that according to ABS classification survey, only 75% of the system installed were being fully operational. The remaining had problems or not operating at all, problems which are related to malfunction of software, hardware and crew’s ability to operate the systems”, Vassiliou concluded.

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