Shipbuilding competition promotes efficient working

A 77m diesel-electric DP2 PSV under construction at Shin Yang; one of two in built at the yard, with the first scheduled for delivery in June 2014 A 77m diesel-electric DP2 PSV under construction at Shin Yang; one of two in built at the yard, with the first scheduled for delivery in June 2014
Industry Database

In order to compete in a crowded market, efficiency is the key to success in shipbuilding today: both efficiency in the yard’s operation and in producing fuel-efficient ships for customers. We spoke to Malaysian offshore specialist shipyard Shin Yang Shipbuilding to see how the company was faring in difficult times.

As a major shipbuilder, how are you coping with the current situation of over-capacity in the shipping industry leading to a downturn in orders?

Our recent orders over the past few years have come from returning customers in UAE and Malaysia. We have reduced our build programme - where we used to build vessels on speculation. We are looking at downsizing our present build capacity and to keep a lean workforce. We have also tightened our control on expenditure in order not to over-invest in unnecessary capital projects.

The speculative market is not looking positive right now due to Chinese yards churning out huge numbers of OSVs, with brokers trying to capitalise on the competitive vessel price and flexible payment and finance terms offered by these Chinese yards. However, we are carrying out detailed analysis of the current market and concentrating on certain areas of the speculative market, so as not to not to end up building vessel types which are beiung mass-produced in batches of 30 or so by Chinese yards.

How are you adapting ship designs and building techniques to improve energy efficiency in the light of the EEDI regulations?

We work consistently with various consultants from Singapore for our designs, as such we prefer working with hull forms which have been proven and model tested for speed optimisation through improved hull lines. We rely on our consultants’ input for resolving any EEDI affected ship type as well. Additionally, as diesel-electric propulsion continues to be adopted in newer vessel designs, we look to the market for ever-improving turnkey or package solutions offering efficient power management in our vessel designs  

In the OSV sector, every shipowner has a different point of view about efficiency. Rather than carbon emissions, most look for lower fuel consumption which in turn translates to lower cost of operation and better marketability of the vessel for long term oil and gas charters. The present EEDI calculations cater primarily to merchant and passenger ships; different criteria should be adopted for the OSV segment with its different functionality and operating pattern. Until this happens, I do not foresee any mandate by charterers to favour EEDI-certified vessels.

Do you find that owners are actively looking at new ships with more efficient hulls and propulsion systems, and larger capacity, as a cost-effective alternative to their existing fleets?

Yes, we do. However, this does not apply to every shipowner, they are mostly constrained by current charter rates for the vessel type and the scope of work required to be performed under contract. Vessels like work barges aren’t exactly hull efficient but in comparison with workboats, operating costs are actually lower. This is highly subjective, as newer design is usually accompanied by higher purchase cost.

Do you have your own ‘Eco-Ship’ designs to offer to owners wanting to minimise operational costs?

No, we do not have any to offer at the moment.

And how much, in percentage terms, do you think eco-measures add to the cost of new builds?

There will be significant increase in engineering, operation, maintenance, machinery and propulsion upfront costs involved. There will also be more use of high tensile plate for the whole ship as ship owners look at lighter steel weight, which further increases cost.

The ROI has to be studied over the life span of the ship or at least during the length of a long-term charter. Many eco-measures are charterer dependant and even though there are already vessels in the market, not many charterers in the market in SE Asia or UAE are preparedto pay more for such vessels.

Do you foresee the forthcoming emission limits, such as the 0.1% sulphur cap in ECAs, the global 0.5% fuel sulphur limits, and IMO Tier III as likely to prompt a surge in newbuilding orders, including ships designed to run on alternative fuels such as LNG?

Yes, however, it is also limited to area of enforcement of Tier III condition and availability of bunkering stations around the vessel’s port of call or, for OSVs, the area of operation. LNG fuel system designs are still relatively new and can only be adopted across the board when the technology and designs are more readily available and proven in the market by different ship owners, including the availability of engine crews to manage this type of vessel and the availability of suitable onshore maintenance facilities.

Has your company been tempted to branch out from your traditional markets into other specialised areas?

Not at this stage.

Where do you see the global shipbuilding industry, and your yard in particular, heading in 10 years time?

I don’t have a strong view at this stage as market prices are predominantly controlled by brokers and the bigger shipyards which monopolise the global market, and affected by growing regulatory pressures on safety and energy efficiency.

I expect more nations to practise cabotage policies in order to develop each nation’s related ship building industry.

Scrapping of vessels will also be better regulated and a lot more expensive in the coming years as nations develop.

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