The lay-up challenge

Republished by kind permission of: A&A Thorpe, 131a Furtherwick Canvey Island, Essex SS8 7AT Tel: +44 (0) 1268 511300 Fax: +44 (0) 1268 510467 shipaat@aol.com

The views of the Publishers do not necessarily correspond to the views of Lambos Maritime Services Ltd.

With all Singapore’s anchorages taken by idling ships and a similar picture in Hong Kong and Fujairah, owners seem to be putting off the inevitable. According to early March figures from DnV, there are close to 400 container ships laid up or idle, around 200 bulk carriers, and about10% of the tanker fleet deployed as floating storage. Altogether the class society reckons there are around 1,000 ships in various forms of lay-up.
   

Of course, the statistics are changing all the time and even DnV’s early March figures probably underestimate the true position by a significant margin. Indeed figures from broker Alphaliner this week indicate that there are now more than 430 boxships laid up, of which 24 are ships of more than 7,500 teu capacity. 
   

Over recent days, reports have surfaced that various leading owners are biting the bullet and laying up their ships and, for the first time, there are signs that these are medium- to long-term lay-up plans involving “cold lay-up”, not just idling, a prospect that was unthinkable this time last year. This week, leading market indices are sharply down again, with the tanker sector also hit by falling demand and waning market sentiment. 
   

All of the principal cargo sectors are vulnerable as the global downturn deepens. And the fact that there are still well over 10,000 new ships on order is like a black cloud looming over everyone. Of course, nobody yet knows how many of these ships will be cancelled, or delayed, or how many yards may go out of business in the months ahead. But the prospect of new deliveries sailing straight into long-term lay-up, if it hasn’t happened on the quiet already, is now inevitable.
    

The type and location of lay-up is itself a challenging issue. So far, most owners have been keeping their ships idling and close to relevant trade lanes, hence the full anchorages in Singapore, for example, and Hong Kong. There may indeed by some advantages to idling or “warm lay-up” – machinery is still in use, routine maintenance continues and ships are potentially well-placed to resume trading promptly if employment opportunities present themselves.
   

However, beyond reducing crews to minimum safe manning levels, manning costs are relatively high, more fuel is needed and there are spares, stores and consumables to consider. Furthermore there are implications for issues such as hull coatings and, to a lesser extent, corrosion. Warmer waters mean more fouling and future hull cleaning of one form or another. However, in such regions, there is significant drydock capacity available for re-commissioning and scope for underwater scrubs, though not necessarily if everyone wants these services at the same time.
   

Cold lay-up, on the other hand, may also have some merit. Wallenius Wilhelmsen Logistics, the global vehicle distributor which prides itself on its ultra-green environmental strategy, is now opting for a longer-term policy. Ships which have been idling for weeks in the hopes of a market upturn are now being committed to medium-term lay-up. It is understood that the operator’s older and less efficient ships will be mothballed first but in a manner suggesting that the global car carrying business could be in for a long haul.
   

Although there are arguments for and against, there are some benefits to long-term lay-up in colder northern waters. There is less hull fouling, for example, and less corrosion. Depending on ship size, reactivation – when it happens – could be an issue. Drydock capacity is more constrained in northern Europe, for example, but there are still repair facilities available and large docks for bigger ships. Docking costs, however, could be significantly higher. 
   

Advice on lay-up strategy and best practice for cold lay-up offers a new, if rather depressing line of business for classification societies. Of course, they’ve provided similar guidance before, but this time could be different – larger volumes of big ships, more powerful engines and more sophisticated equipment and installations generally. Is there also scope for repair yards to assist? Helping in the care and maintenance of laid-up tonnage could be linked to a recommissioning docking in the future. Just a thought!