Ballast price war on the horizon
Ballast water management system (BWMS) suppliers may be experiencing the opening stages of the long-anticipated retrofit boom. But according to Tore Andersen, CEO of Optimarin, a new dynamic is challenging manufacturers.
Having sold 17 systems over the first three months of 2018, compared to only six in the same period in 2017, Andersen is highly optimistic for the coming year. The company, which has operated at a loss for decades to the chagrin of its “very patient investors”, made a profit for the first time in 2017.
“It looks like finally the market has started moving,” he says. “Even though IMO moved the installation date back two years, the US Coast Guard requirements have pushed the market. We had a fantastic March, and April is looking good as well.
“We think we are at the beginning of the famous wave we have been waiting for all these years – my colleagues elsewhere in the industry are seeing something similar.”
But while the ballast water boom may be about to begin, the landscape has changed dramatically. Downward cost pressure from owners means many companies will not make much profit on the sales of their systems, which are likely to cost between €100,000 and €700,000, excluding planning, engineering and installation, and are fighting instead to be able to secure large market share for spare parts, training, and servicing divisions.
“That’s a very big market,” explains Andersen. “If you lower your price dramatically and sell a lot of systems, you will get a lot of spare parts sales – that’s a good business. So a company might decide to keep prices low for a while to triple profits later.”
Any manufacturer which tries to sell its system at a premium will quickly be undercut, Andersen points out. “The price has moved down quite a lot in the past two years,” he says. “We will obviously be trying to get the best price we can, but especially with the bigger fleets, there is huge pressure on the market. Don’t forget this industry has been starving for many years, and everybody needs to get some revenue. We have been losing money for years.”
The fact that Optimarin is the only manufacturer to offer a five year warranty on its system - a clear indication the company is confident in its technology and components - has not allayed that pressure.
Optimarin has gone to considerable trouble and expense getting full type approval from the US Coast Guard in order to penetrate that market, but the assurance of compatibility with the American system will not carry any price premium, says Andersen, with most owners looking only for the lowest price they have to pay.
While the US type approval process is now well underway, Andersen indicates that elements of the American ballast water rules are still holding it up, with the market experiencing a paralysing perfectionism in some states.
“For example in California, they are going for 100% kill, which is not possible in everyday operation,” Andersen says. “I am afraid that port state control will be extremely strict, with a lab on the quayside, and they say ‘we will quarantine you because you didn’t kill the last 2% of organisms’.”
The concern is similar to that which hung over the prolonged discussions at IMO. By complaining about 98% effective systems, regulators in the US could be losing the opportunity to have 98% of invasive organisms neutralised every day. As Andersen notes: “If we are protecting the oceans from 98% of invasive organisms, we are 98% better off than yesterday.”
LATEST PRESS RELEASES
Research has shown that 80% of all hydraulic failures can be directly attributed to oil contaminatio... Read more
Turku, Finland, 09.10.2018. Auramarine, the leading provider of engine room fuel supply and auxiliar... Read more
Geislinger GmbH, located in Salzburg, Austria, celebrates its 60th anniversary this year which coinc... Read more
Expanding its global presence, MyTaskit has signed its first international reseller. Auckland, New Z... Read more
Vickers Oils are pleased to welcome Ian Bower, Business Development Manager and Esther Murray, Marke... Read more