Despite signs of recovery, an adaptive approach to the new realities of the offshore support marketplace is required to ensure long-term survival, say representatives of Singapore’s OSV owners
Despite signs of recovery, an adaptive approach to the new realities of the offshore support marketplace is required to ensure long-term survival, say representatives of Singapore’s OSV owners
“A lot of people talk about mergers and acquisitions and consolidation, and how that needs to happen,” Pacific Radiance managing director James Pang told the Asian Offshore Support Journal Conference held in Singapore in September 2018.
“The reality is that it sounds good in theory, but it’s a lot harder to execute and the benefits are a lot harder to realise.” While consolidation can bring economies of scale, this only works if you have the same or similar vessel types, with the same equipment, he added. “[We need to] change the business model, how we approach the market.”
Swire Pacific Offshore Operations commercial director Captain Duncan Telfer espoused a similar viewpoint, noting that the level of fragmentation in the global OSV fleet means mergers and acquisitions alone cannot really make a difference to rates until the problem of oversupply – which, based on age and technical specifications, Capt Telfer estimated at around 1,000 vessels – is solved. “It can bring efficiencies, yes, but will it make a difference to oversupply? Not until we get rid of those thousand extra vessels,” he added.
Capt Telfer called for owners to focus on keeping vessels that are viable. “Our clients have a choice right now,” he said, noting that the fewer vessels retained, the quicker the market will recover. He noted as particular issues vessels more than 15 years old, vessels that do not have a dynamic positioning notation of DP1 or DP2, and vessels that have been laid up for more than three years, adding “I would suggest there are a lot of vessels that should not be coming back to market.”
“A lot of the companies who overbuilt have to downsize to the right size to survive,” added Kim Heng Offshore and Marine Holdings executive chairman and chief executive Thomas Tan. “We have to keep learning as quickly as the world keeps changing.”
Turning to the issue of the talent drain and how this can be addressed, technology and training were identified as key factors to consider.
Capt Telfer said “Here in Singapore we’ve got some very good opportunities such as the Maritime One scholarship.”
He noted that while it may seem counterintuitive, the current market situation makes it an ideal time to enter the world of offshore. “It teaches us what cash flow is all about – it’s not profit and loss, it’s survival.”
“We’re coming back into recovery and we need people that are competent and professional and arguably we’ve lost a lot of them along with the vessels that have exited the market.”
“We can’t stop investing in training […] training must continue, but there’s going to be a struggle as we recover to keep those positions filled.”
“It’s easy to hire talent but difficult to retain,” said Mr Pang, noting that the younger workforce in its 20s and 30s is tech savvy and wants to work for companies that are likewise. “Companies need to speak their language and provide them with a platform to grow that they’re comfortable with.”
This requires embracing technological changes, such as using predictive maintenance, to avoid younger, tech-savvy employees becoming frustrated with the corporate culture, he added.
“At the end of the day you need to really invest in technology and develop a sustainable competitive advantage,” he added.
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