Supply Boat Market Report - December 2019

Following is a breakdown of available supply and tug supply vessels we currently have as shipbrokers officially listed for sale worldwide. Not included are those available on a private and confidential basis.

Of 13,533 vessels and 3,701 barges tracked by Marcon as of end December 2019, 3,097 are supply and tug supply boats, with 274 officially on the market for sale. 68.11% of foreign and 58.43% of U.S. flag supply / tug supply boats Marcon has officially listed for sale directly from Owners. Marcon's Sales Price to Asking Price ratio for all types of vessels sold in 2019 is 89.15%, an increase over 2018's 77.79% and 2017's 81.49%. While this percentage is higher than the previous years, this is not due to higher selling prices as much as it is due to sellers' asking prices having to come down in order to sell the equipment, especially as we crept closer to the end of 2019 and more companies were trying to get these assets off of their books.

Marcon's Market Comments

Little has changed in the OSV market since our June 2019 report. The few sales seen have been at deeply discounted prices. Asking prices are still high for vessel conditions and ages. For older or rougher condition vessels, selling prices are near or at scrap levels. On the plus side, we have heard of vessels going back to work, positively impacting utilization and day rates. But these improvements are still not enough to help owners break-even.

The OSV market is significantly overstocked. Scrapping continues but not at a fast enough rate to balance supply and demand, especially in light of new deliveries scheduled for 2020 and 2021. AlixPartners is projecting that by December 2021, oversupply will be 30% of the worldwide fleet. Sea-Web reports 685 PSVs and AHTSs broken up, to be broken up or scuttled, up 4.58% from our last report, June 2019. 491 offshore support vessels of other types are also meeting this fate, up 2.08% in three months. In 2019, approximately 64 PSVs and AHTSs and approximately 29 offshore support vessels of other types were broken up, scuttled or noted to be broken up.

At the corporate level, we are seeing acquisitions, consolidating the number of operators. Oftentimes though we immediately see after these acquisitions, dumping of older units onto the market. These units languish, falling into further disrepair and are not attractive at all to buyers. Even with the consolidations, the average fleet size is 6.1 vessels, as 70% of the worldwide fleet is controlled by about 400 owners. With this many owners, it is difficult to get cohesive movement among them to take the steps needed industry-wide to deal with oversupply. Larger owners are undergoing aggressive reorganizations, reducing debt, restructuring costs and discontinuing or selling off unprofitable segments. Current worldwide events, such as trade tensions, political scuffles and the recent outbreak of coronavirus, contribute significantly to the continued volatility in oil prices. While some larger owners have made investments, these are not enough to put more of the fleet back to work.

Tug supply boats officially on the market for sale in total is 129, three fewer than one year ago, December 2018 but the same as five years ago, November 2014. Composition in the last year has changed with the biggest shifts being seven more above 12,000HP, but five fewer 7-8,000HP and four fewer 3-4,000HP AHTSs offered. In today's market many additional vessels, probably equal to or greater than the number "officially" listed can be developed on a private & confidential basis - just a phone call or e-mail away. The good news for potential serious buyers, the few out there, is that vessels now offered for sale generally average several years newer than those five years ago. November 2014, the average age of all AHTSs for sale was 18 years old. Today, the average age is 14 years old. At the time of this report, 67 tug supply boats officially for sale were either built within the last 10 years or are newbuilding re-sales. Only 13.18% of tug supply boats are 25 years of age. Counter-balancing today's "old ladies" are seven newbuilding 4,200-12,000BHP AHTS resales scheduled for delivery end 2019 through early 2020. Five years ago, 43.41% of AHTSs for sale were at least 25 years old; one year ago, 18.94% were at least 25 years old; both then compared to today's 13.18%, reflecting the purging of older units from the fleets over the past five years. At December 2019, the oldest AHTSs available were two built in 1971.

Over the past year, we have seen a continuation of all sizes of PSVs coming officially off the market with a net increase of one PSV listed for sale. The greatest changes are 12 fewer 150'-160' with an average age built of 1993 vs 1998, nine more 220'-240' (1997 vs 1994), six fewer 200'-220' (2002 vs 200) and four more over 240' (2006 vs 2006) PSVs presently on the market. Unlike the anchor handling tug supply boats, PSVs now being offered are generally older than those offered back in November 2014 with the average age of all available for sale increasing from 18 years of age to 20 years old now. As of the time of this latest report, Marcon International officially has available 34 supply boats built within the last ten years, which includes three 196.8' to 255.9', 4,000-6,400BHP newbuilding re-sales scheduled for delivery in 2019 in the Far East. 44 PSVs, or 30.34%, are 25 years of age or older, with the oldest PSV listed built in 1971 - compared to one year ago when 39 PSVs (27.08%) were older than 25 years with the oldest a 1969-built PSV. Five years ago, the oldest PSV on the market for sale had been built in 1968, but 49 PSVs (39.52%) were older than 25 years.

In addition to those for sale, Marcon has 97 straight supply and tug supply vessels listed for charter worldwide, 19 less than one year ago, but there are many more in today's market idle and hungry for employment.

The dominant location for second-hand tonnage on the market December 2019 is the U.S. with 34.7% (down from 35.9% one year ago and 19.1% five years ago) followed by Southeast Asia with 19.0% (up from 18.8% one year ago and 16.3% five years ago), Far East with 11.3% (down from 13.0% last year and 23.9% in 2014) and the Mid-East with 7.7% (down from 11.5% last year and 11.6% five years ago). Where location is unknown is 2.6%. The rest of the globe makes up the final 24.7% of locations.

CAT is the principal main engine suppliers to this sector powering 87 of the supply & tug supply vessels listed for sale, followed by Cummins in 39, Bergens in 30, EMDs in 25, Niigata with 22, Wartsila in 17, 15 with MAKs and Yanmar and 11 with GMs. 15 units are powered by various other manufacturers. Compared to five years ago, Bergen is up 900.0%, Yanmar up 275.0%, Wartsila up 142.9%, Cummins up 129.4%, CAT up 81.3%, while EMDs declined 30.3%, Niigata declined 21.4% and GMs dropped 8.3%.

 

Commercial Marine Brokers since 1981