The salvage industry is expected to work harder for less revenue, according to the International Salvage Union (ISU)’s latest statistics
There has been a significant drop in revenue despite a dramatic increase in the number of salvage services that ISU members have provided.
Gross revenues for ISU members from all activities dived from US$717 million in 2015 to just US$380 million in 2016. Yet, ISU members completed 306 dry salvage services last year compared with 212 services in 2015. This was the highest number for more than 15 years.
Income from wreck removals had grown during the past decade, but it fell to US$172 million in 2016 compared with US$397 million in 2015. This is despite a rise in wreck removal jobs from 64 in 2015 to 131 in 2016. There was a continued decline in the percentage of salvage jobs undertaken under Lloyd’s Open Form (LOF), with 33 per cent of dry salvage revenue coming from LOF contracts, compared with 46 per cent in 2015 and 55 per cent in 2014.
It reflects the continuing trend to use other commercial contracts and terms in place of LOF. Only 11 per cent of all dry salvage cases were conducted under LOF. Revenue from operations conducted under contracts other than LOF was down 23 per cent year-on-year to US$75 million.
Total salved values, including ship and cargo, in LOF cases rose to US$845 million in 2016 from US$638 million in 2015. ISU president John Witte said there is a contradiction between salvage operations and revenues for salvors. “The average revenue from all cases declined,” he said. “It may be due to fierce competition forcing salvors to undertake cases for much lower returns. And general commercial pressures across shipping could be squeezing the margins.”
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