The offshore support vessel (OSV) market may have charted an improving course over the last few months, but inevitably headwinds remain.
While there’s been an uptick in offshore vessel and general shipping requirements since the middle of last year, no fundamental market dynamic changes that fast. The crucial factor in a sustained recovery will be tackling vessel oversupply.
Before the last oil price crash, many vessel companies had just instructed new builds or significant refurbishments on vessels and now, three to four years later, those projects are coming to fruition. This means there will be a glut of new vessels entering the market at a time when work is starting to pick up.
This is, of course, good news for the operators, but not for the vessel companies.
That said, better news comes in the form of high scrappage figures in 2018 which, if sustained, will contribute to better returns for owners in the future.
And, looking at the sector as a whole, significant opportunities exist for companies able to successfully capitalise on new and emerging maritime technology as well as improving international markets, such as Africa and South America.
The small print
On the contracts front, international shipping association Baltic and International Maritime Council (BIMCO) has spent 2018 reviewing and overhauling certain provisions and types of contract for the international oil and gas shipping market.
This includes new bunker clauses to supplement standard contracts regarding fuel sulphur rates for time charter parties, facilitating the switch from 3.5% to 0.5% sulphur content fuel by 2020 and ensuring compliance with environmental regulations and the International Convention for the Prevention of Pollution from Ships (MARPOL) requirements.
BIMCO also prepared new terms for liquefied natural and petroleum gas transportation with assistance from the Asian market, one of the largest purchasers of LNG and LPG, again highlighting global opportunities.
The organisation also revised and updated ship repair contract terms for both major work and minor overhauls in November, in recognition that the vessels needed to be ready to capitalise on an improving market.
And for publication this year, BIMCO is developing a clause dealing with cyber security risks and incidents that might affect the ability of one of the contracting parties to perform its contractual obligations.
An evolving sector
And cyber security is crucial when you consider the technological evolution of shipping towards increasingly integrated and autonomous solutions that help transform operational efficiency as the sector moves into increasingly challenging environments.
On its website, advisory and certification company DNV GL says interest in autonomous and remotely-controlled ships is growing fast thanks to recent developments in sensor technology, connectivity at sea, and analysis and decision support software and algorithms. In fact, it expects the first commercial projects to be ready for launch in the near future.
In short, with the oil price stabilising, market activity will increase. This means vessel owners, particularly those who are agile and capable of adapting to the new landscape, can enter 2019 on a steady footing with a degree of optimism.