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    More layups - but little impact so far

    News // May 11, 2015

    Broker Westshore reported recently on the growing number of vessels being laid up in the North Sea, but said that, so far, the layups have had relatively little effect.

    Westshore said the average rate for a PSV on the spot market this month fell to £3,220. That’s the lowest in several years.

    "Moreover," said Westshore, "whilst we have seen dips in rates before, this is surely the most prolonged downturn that the market has seen since the 80s. Adding insult to injury is the fact that very little light at the end of the tunnel is expected."

    This dire prognosis has led several owners to take the step of putting vessels into layup. French owner Bourbon announced that 23 of its fleet were currently in layup during its first quarter results release. Eidesvik took Viking Nereus, which had been trading the spot on the UK sector, out of the market and is currently tied up in Norway.

    UP Agate and UP Jasper also on the British side met a similar fate at the end of April. Maersk Supply announced that Maersk Shipper and Tackler would head to Invergordon as day rates reached “unrealistically low” levels according to management.

    Siem Aquamarine has left the market despite the fact it was one of the more reluctant owners to take this step up until now. Most if not all owners are saying more can and will follow.

    The worst hit area of the spot market is UK-based PSV tonnage. A quick survey revealed that, curiously, owners with vessels in this market are the most reluctant to lay up tonnage.

    Westshore said it believes that a combination of company culture and ownership (not stock listed) and crew nationalities has resulted in the decision to ride out the storm as best they can avoiding any layup. And of course this just prolongs the downturn.

    "There are several term charters yet to be concluded which may be giving owners a sense of hope that work can be found. But it is silly to think that the amount of tonnage will come anywhere close to be soaked up by term requirements," said the broker.

    "Realistically the stream of vessels heading into layup will pick up as we move into the second half of this year. Meanwhile one of the intended benefits of sending a vessel into layup – an improvement in the market, has yet to be seen at all.

    "In our opinion, it’s going to take another 15-20 PSVs disappearing from the spot market and a leap in owner’s confidence levels before rates take a turn for the better."


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