A relatively small regional fleet can send day rates soaring during times of market tightness, but can soften just as quickly
Anchor-handling tug supply (AHTS) vessel owners operating in the North Sea have endured a difficult year, with many struggling to achieve sufficient utilisation at sustainable rates, according to shipbroker Seabrokers.
If there was any hint of a silver lining it would be those periods of sustained tightness on the spot market in September and October, with several days seeing the sector completely sold out in Norway and the Scotland and rates soaring. There were just a few vessels available in the southern sector of the North Sea.
Seabrokers says the main reason for the market tightness was the relatively small size of the regional AHTS fleet. As a result, the shipbroker points out, it does not take long, particularly when bad weather delays operations, for supply to tighten if two or three rig moves materialise in short succession.
The market tightness inevitably left charterers exposed to higher day rates than they had become accustomed to paying earlier in the year, with several faced with rates north of £45,000 (US$60,000) per day. In October 2019, the average day rate for an AHTS vessel of less than 22,000 bhp on the spot market was £34,305 (US$45,700), up 173.30% from £12,552 (US$16,700) in October 2018. In October 2019, average day rates for AHTS vessels greater than 22,000 bhp were £29,200 (US$39,000) a jump of 132.7% over October 2018 when they were £12,555 (US$16,700) per day.
Such volatility was by no means smooth sailing for OSV owners, and the market can soften just as quickly as it tightens; there were several instances at the opposite end of the spectrum, with charterers paying as little as £10,000 to £15,000 (US$13,300 to US$20,000) per vessel for rig moves.
Average day rates for platform supply vessels (PSVs) operating in the North Sea were actually 30% lower in October 2019 than they were a year earlier. PSVs with clear deck areas of less than 900 m2 were chartered at average day rates of £5,916 (US$7,890), down 29.91% from £8,441 (US$11,260) in October 2018. PSVs with clear deck areas greater than 900 m2 garnered average day rates of £6,940 (US$9,255) in October 2019, down 31.64% from £10,152 (US$13,540) in October 2018.
Among the vessels arriving in the North Sea spot market were AH Varazze out of the Mediterranean, Far Sapphire out of South America, Far Soltaire out of Baltic Sea, Normand Drott out of the Caribbean, Sea Spear out of Russia and Standard Princess and Standard Supplier out of the Baltic Sea.
The North Sea market is not for the faint-hearted and there are no signs that the dynamics are likely to change soon, says Seabrokers.