ISU statistics highlight the pressure salvors are under from competition and safer navigation
Safer seas and rising competition are putting pressure on salvage company earnings. Fewer ships require salvage and wreck removal work has declined, reducing revenues, while more companies are tendering for these jobs.
Gross revenues for members of the International Salvage Union (ISU) fell around 10% in 2018 to US$409M, compared with US$456M in 2018.
This fall was partially due to a 4% drop in salvage activity from 243 ISU services in 2017 to 234 services in 2018.
Salvors have seen a 42% drop in annual revenues from salvage projects in three years, as ISU members gained US$717M in revenues in 2015.
Wreck removal income and services also declined. There were 71 services generating US$208M of revenue for ISU members, compared with US$264M from 116 services in 2017.
“The 2018 ISU statistics again show the economic pressures on our industry,” said ISU president Charo Coll.
“There is fierce competition,” she said. “But, professional salvors with their own people, equipment and experience bring an expertise to the most difficult jobs giving confidence that the operation will be expertly managed, lives saved, the environment protected and the value of property preserved.”
One positive in the statistics is the re-emergence of Lloyd’s Open Form (LOF) as an important salvage contract.
ISU members conducted 55 salvage operations under LOF generating US$104M in 2018, compared with 46 cases worth US$53M in 2017.
Average income from each LOF case was US$1.9M, representing 7.5% of the average LOF salved value.
Around a quarter of all salvage operations were undertaken under LOF and these represented 58% of the total salvage revenue in 2018.
ISU members provide salvage, wreck removal and emergency response on various contracts, said Ms Coll.
“ISU committed in 2018 to be forward looking and to recognise that its members contract in different ways and deliver many vital services,” she said.
“Their operations help to prevent and mitigate loss; protect the environment and support world trade by keeping goods moving and seaways and ports open.”
Revenue in 2018 from operations conducted under contracts other than LOF was US$75M, down from US$115M the previous year. Average revenue from non-LOF contracts was US$419,000 per case.
Ms Coll highlighted how the salvage industry provides “value to shipowners, insurers and the wider shipping industry and society.”