Picking the moment for BWMS installations
Ballast water system suppliers fear that ship owners are seeking to postpone installation decisions, rather than using extra time to ensure correct selection and timely retrofitting. Gavin Lipsith writes.
The Marine Environment Protection Committee’s (MEPC) decision last year to delay the system installation timeframe under the Ballast Water Management (BWM) Convention aimed to give shipowners more time to install systems complying with the newly agreed G8 type approval testing and certification standards.
For suppliers waiting for a long-anticipated payback of their research and marketing investments, that decision was a disappointment, although perhaps not a surprise. Ship operators are not known to rush to install technologies, especially expensive technologies that offer no return on investment, before they are regulated for. But, with at least a two-year extension on the installation timeframe (depending on survey dates), is there an argument for ship owners to be taking their decisions early?
According to Steve Candito, CEO of US-based system provider Ecochlor, the concern is not that ship owners will run out of time, but that they could run out of options.
“With the market peak commencing in 2020, as many as 35,000 vessels will be competing for shipyard dry dock space during a 30-month timeframe,” Candito explains. “Many in the industry would not be surprised to find the approval process from class or flag delayed by many months for engineering designs and installation integration sign-off.”
Meanwhile, Candito notes that only a very small segment of the naval architect and marine engineering firms around the globe have actual hands-on experience in the complex engineering required for the integration of a BWMS into an existing ship’s operations. That lack of experience could come back to haunt ship owners, he suggests.
“The absence of owners moving forward on BWMS compliance now will impact the ability to perform cost-effective, smooth and efficient installation for their ship or fleet of vessels at a later date by limiting options in shipyards, engineering, regulatory agencies and manufacturers,” says Candito.
“If, due to limited dry dock availability, the owner schedules with a shipyard that is inexperienced in a BWMS retrofit or is far from the vessel’s trading route, it could add significant delays to the process, as well as additional charges to ensure that experienced stakeholders are in the yard to assist with the retrofit. Marine engineering firms that do not understand the nuances of the different BWMS technologies could make serious integration mistakes that hinder the routine vessel operations. With time limitations, the preferred BWMS maker may have extended manufacturing timelines and your choice of the most appropriate system could be unavailable in time for your IOPP renewal deadline.”
If decisions are made too late, shipowners’ options for a productive and successful BWMS retrofit may incrementally decrease, Candito argues. He believes that the risks associated with a delay outweigh the minimal benefits of waiting any longer to start the retrofit process for ballast water management.
“From a cost-basis calculation, this risk might include that the ship may not be able to trade at all or to primary regions, such as the US. This risk might outweigh the time and money saved by delaying a BWMS installation until the last possible moment.”
Paul Kim, marketing manager, Panasia Europe, concurs with that viewpoint. His advice to ship owners is to consider bringing forward some installations in order to take advantage of lower retrofit costs, believing that yards and engineering groups have only limited capacity and will inevitably increase their prices as demand grows.
Pansia has completed USCG testing for its own BWMS in the second half of last year and is hoping to file its application of US type approval very soon. To date the company has recorded 1,180 orders, of which 850 have been delivered. Of these, 250 are retrofits. A total of 35 installations have been completed.
“Retrofitting will also be a challenge given the number of repair yards,” Kim explains. “From a total worldwide of 300 or so yards, it may come down to just four or five realistic possibilities for each owner given location, capacity ship size, type and workforce size.”
Scrapping capacity is an overlooked factor in owners’ calculations, notes Kim. Many owners will be examining whether to scrap old ships and build new ones that comply with ballast water regulations, rather than invest in expensive installations in old vessels. But this means they will ideally scrap before the new vessel is delivered, unless they want to increase their fleet size.
However, Kim’s research indicates that total retrofitting capacity is 4 or 5 times larger than the global annual scrapping capacity of three million gross tonnes. This could lead to a situation where owners struggle to find a way to scrap their vessels, but cannot necessarily find a yard free to perform a retrofit either – leaving the vessel unable to operate in compliance of the BWM Convention.
According to Wärtsilä, the only company to offer both a UV and a electrochlorination-based treatment system, more than 26,000 ships above 400gt will be required to comply with the BWM Convention, with the demand for retrofit projects and engineering services likely to peak between 2020 and 2024. Any demand from newbuild vessels will add to this work.
“From our experience the timeline for retrofit project completion requires a minimum of 6–8 months,” says Markus Ljungkvist, general manager, project sales, Wärtsilä Service. “Ship owners and operators could face supply issues without scheduling and planning their BWMS installations well in advance of dry-docking and compliance dates. In partnering with our customers to provide a wide range of support from BWMS technology to hands-on maintenance service, we aim to increase operational reliability.”
In addition to its technology alternatives, Wärtsilä’s offering retrofit projects services that can extend to full EPC (engineering, procurement and construction) contracts. Its scope of work can include not only the equipment but also feasibility studies, in-house engineering expertise, installation, advisory and OEM (original equipment manufacturer) lifecycle support.
“A single solution provider adds to the efficiency of retrofit projects and minimises the risks and time needed for retrofitting BWMS, thus optimising operations and enabling growth for our customers. It also provides ship owners and operators with cost predictability,” says Ljungkvist.
Alfa Laval is another major supplier that is focusing on engineering support and after sales service. The company saw a significant uptick in orders after the IMO convention ratification and US Coast Guard type approval of its UV-based PureBallast system. Anders Lindmark, general manager, PureBallast, Alfa Laval, notes that in 2016 the company received orders valued at SEK243 million (US$24.8 million). In the first three quarters of 2017 alone, that figure rose to SEK500 million (US$51.1 million).
Lindmark has a different perspective on the installation timeframe. “We are happy that we now have a timeframe accepted by all the players in the market,” he says. “Now we have the revised G8 guidelines and a confirmed installation timeframe, we think that is good to have those situations clarified. We are here for the long run so a two-year shift from IMO doesn’t trouble us. Even without the IMO the US process still goes on and we noticed more interaction from ship owners and more requests for quotes.”
Alfa Laval’s longer term view is reflected in its evolving approach to service. Lindmark notes that ships will be required to meet discharge standards over the course of their lifetime. So while supplying compliant equipment is an important element, ensuring that systems are maintained and operated properly is critical.
“We are strengthening our global service organisation within Alfa Laval and we are promoting service concepts together with our equipment,” Lindmark reports. “The project, installation, and commissioning stages are important but we also want to be close to the customer through the operation phase.”
Crew training is an important aspect of this approach. That applies to training the crew that are onboard when the system is installed, but also making sure that future crews know how to use the equipment. This handover of technology is something Lindmark sees as a common challenge in shipping, and something on which Alfa Laval is focusing.
Service is also seen as a critical element for Optimarin, one of the biggest pure-play BWMS suppliers in the market. IN November it introduced a five-year global parts and service guarantee for its IMO and USCG type approved BWM system after requests from ship owners.
The company believes that it is the first BWM supplier to offer such assurance, which CEO Tore Andersen says aims to give ship owners peace of mind that the system meets expected standards of operational performance.
The guarantee does not cover failure to meet IMO or USCG discharge standards but it does cover owners if, for example, an alarm does not function as it should on a system that has been maintained and operated as specified in the manual.
Optimarin can put 30 months of spare parts – including UV bulbs, filters and butterfly valves - onto a vessel up front so that maintenance can be performed remotely, assisted by the supplier’s remote servicing system. The cover also includes a visit from an Optimarin engineer every two and a half years to both check the system and update crew.
“Some of our competitors are on the second, third and fourth generations of their technology,” Andersen notes. “We’ve been operating the same system for more than 20 years, which is why we can offer this guarantee.”
The guarantee, offered at a “small premium” to the system price, is something that owners have asked for, says Anderson. He notes that big liners are tendering for systems this year, and while Optimarin does not yet have a first customer for the guarantee, he expects the offer to encourage negotiations with big fleet owners.
But no amount of guarantees or service promises will rectify the installation of an inappropriate system. According to Andrew Marshall, CEO of inert gas generator and BWSM manufacturer Coldharbour Marine, many ship operators require a far better understanding of ballast water treatment technologies and their shortcomings in real-life applications. Inadequate due diligence now could result in expensive operational problems in the future, and potential long-term reputational damage, he warns.
Marshall predicts major problems ahead for those ship operators who have adopted a strategy of minimum compliance based on lowest cost, or simply agreed on ballast water treatment systems as part of a standard shipyard specification.
“The correct choice of system requires a clear understanding of complex scientific and operational issues,” Marshall declares. “As the US Coast Guard (USCG) said in December, plug-and-play is not a realistic option. I fear that many ship operators have not understood the huge risks of choosing a treatment system that is simply not fit for purpose.”
With this in mind, Marshall believes that, while the delay in installation timeframe is “regrettable”, it does at least allow more time for the essential due diligence with which many ship operators have only just begun to come to terms.
“In addition, the vital importance of system maintenance is only beginning to be understood,” Marshall continues. “Even when a system is fit for purpose on day one, will it still be working effectively and able to pass Port State Control (PSC) tests in two years’ time? For example, a 40-micron filter, which is integral to the effective operation of many systems may be 100% effective when it’s new, but will it work as well when it’s filtered thousands of tonnes of mucky ballast water?”
Filters are one element particularly susceptible to wear and tear, and Marshall notes that a filter that is 40 microns today may no longer be 40 microns in a year’s time. “If larger organisms start to get through, then treatment efficacy is compromised, leading to potential failures in PSC tests. The crew cannot assess any changes to the condition of the filter – the only way to protect against PSC failures is to schedule regular filter element changes, with all the costs that that entails.”
The risks of inadequate due diligence carry huge financial implications for owners, including delays, higher port charges, penalty fines and off-hire. In a worst case where a vessel failed PSC tests and was forced to sail for international waters, de-ballast, re-ballast and return to the discharge port, other costs would include additional fuel and more off-hire.
“However, I believe the biggest potential risk of poor decision-making now is corporate reputational damage in the future,” says Marshall. “Which charterer would risk hiring a ship with a known history of delays, or an operator with a list of PSC issues? You can be certain that the end-users of shipping services will be conducting their own due diligence to the very highest standards.”
Owners could clearly benefit from spending the extra time granted to them by conducting the research needed to make wise system decisions. But according to Ecochlor’s Candito, this is not always the case.
He says: “Unfortunately, it appears many shipowners have instead decided to use this time to further delay retrofitting their vessels by trying to reinstate original renewal dates for IOPP Certification with flag states after decoupling or applying for a USCG extension.”
In an asset-driven business like ship owning, knowing when to make investments is key to success. But after years of investment themselves, system suppliers are justifiably impatient. Regardless of the timing discussions though, the most important factor of all - in terms of the impact of the regulations and the ability of ship owners to comply - is that the correct systems are ultimately installed.
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