The ballast water treatment technology market should expand rapidly in the run up to the 2024 BWM Convention cut-off, but who will profit?
According to Clarkson Research Services, as at the beginning of May 2019, there were 6,517 vessels delivered with ballast water treatment systems installed and another 2,391 vessels on the orderbook with ballast water treatment systems nominated for installation upon delivery.
Clarkson Research Services has also recorded a further 1,200 vessels that have had ballast water treatment systems retrofitted, and another 950 contracted.
This indicates that there is a sub-set of 11,058 vessels that have or shortly will have ballast water treatment systems, out of a current world cargo fleet of 59,175 vessels.
In theory, the potential market for ballast water treatment systems is the remaining 80% of the world cargo fleet, which, all things being equal, will need to have been retrofitted with ballast water treatment systems by the end of the expiry of their IOPP certificates or 2024.
Of course, not all of the world cargo fleet will still be sailing by 2024. The cost of purchase and retrofit of ballast water treatment systems will not be economically feasible for some older ships, and owners may choose to disinvest at that point.
During the boom phase of the shipping cycle from 2004 to 2008 there was a surge in ordering and new vessels continued to pour out of the shipyards long after the start of the global financial crisis that started in 2008.
As a result, in most shipping sectors the fleets are relatively young. For instance, in the crude oil tanker sector the average age of the fleet is 10 years old, and only 22% of the fleet is 15 years old or older. To a large extent, there is little incentive to order new crude oil tankers, and the orderbook is a relatively small 9% of the current fleet.
These statistics suggest there needs to be a significant ramping up of production if global manufacturers are going to meet the demand to install ballast water treatment systems.
In early 2019, Ecochlor announced the opening of a new factory in North Haven, Connecticut, for production of the chlorine dioxide generator for its ballast water management system. Ecochlor noted that this was required due to a significant upsurge in orders. ProFlow Inc, Ecochlor’s manufacturing partner, was able to quickly increase production capacity and efficiency by simultaneously incorporating lean manufacturing procedures and maintaining its ISO 9001 certification. ProFlow’s production space has surpassed 30,000 ft2, and the new factory will be exclusively used to manufacture the generators.
Table of AMS expiration by year: “Renewed USCG AMS by Year of Expiry
ProFlow has been building the Ecochlor ballast water management system generator since 2001. “This past year we have seen increased orders from Ecochlor, so our manufacturing volume had to grow to match the high demand. With this additional factory space, we are able to move from one-off customised deliveries to volume-production assembly cells. In addition, we have built up an inventory of components and sub-assemblies for faster delivery times. These changes in our production process have allowed us to reduce our manufacturing time by more than 25% while also increasing our productivity,” said ProFlow president Kurt Uihlein.
Additionally, the manufacturing site and new assembly procedures have allowed Ecochlor to boost deliveries to over 200 units per year. The new assembly process has each generator unit in a production cell for approximately two to three days, followed by state-of-the art factory acceptance test (FAT) cells that allow for multiple generators to be tested simultaneously. The factory’s location was chosen strategically, as it is situated near the Ecochlor corporate engineering offices and an additional ProFlow manufacturing site for the generator’s sub-assemblies.
Ecochlor chief executive Steve Candito stated: “This new factory is a reflection of Ecochlor’s dedication to providing an exceptional product to our customers in a timely manner. The additional production cells and workspace in the factory, along with increased staffing, has allowed ProFlow to more than double our delivery capacity from last year. We are happy to collaborate with a company that is committed to hiring talented people and building high-quality products using the best available means.”
While Ecochlor made the decision to manufacture in the US, Wärtsilä signed a manufacturing license agreement with Jiujiang Precision Measuring Technology Research Institute, a subsidiary of China State Shipbuilding Corporation (CSSC), based in Jiujiang, China. The two-way agreement provides CSSC with access to technology and the rights to manufacture the Wärtsilä Aquarius EC ballast water management system under license for applications to CSSC customers. In return, Wärtsilä gains access to CSSC’s new manufacturing facility, thereby further supporting supply and demand needs for the Wärtsilä ballast water management system direct to Wärtsilä customers.
Wärtsilä retains ownership of the Aquarius Electro-Chlorination technology and all associated intellectual property rights, while CSSC will manufacture the system for sale and installation with CSSC newbuild and retrofit projects. CSSC is the largest group of shipbuilding companies in the world with a significant need for robust ballast water management system technology for its Chinese and international customers. The system will be supplied with Wärtsilä Type Approval.
“This is another landmark agreement forming an important new partnership in China. It facilitates the supply of Wärtsilä Aquarius EC ballast water management systems to a significant provider in the Chinese marine market, both for new shipbuilding and retrofit projects. By combining the strengths of our two companies, we can more effectively meet the growing demand for electrochlorination ballast water management system for medium to large vessel applications. Our combined global service networks also ensure that the BWMS units are fully supported wherever and whenever needed,” said former Wärtsilä Marine Solutions director of ballast water management systems, Dr Joe Thomas.
“As a subsidiary of CSSC, our institute has strong design and manufacturing capabilities. We have easy access to the resources concerning shipbuilding and retrofits for marketing and sales of ballast water management systems, and Wärtsilä, as a significant global marine equipment supplier, has great advantages in technical support and global after-sales service. This milestone event represents a promising start to our two companies’ partnership. The signing of this agreement will promote further co-operation between the two companies,” said Jiujiang Precision Measuring Technology Research Institute director Mr Zou Xiubin.
Both the Ecochlor and this particular Wärtsilä solution (it also produces a UV system) feature electrochlorination, which is one of 35 different combinations of methodologies used in the ballast water management systems currently available. Ballast Water Treatment Technology estimates that there are currently around 100 different systems actively being marketed. Which ones will survive and profit from the surge in orders to meet the deadline is difficult to predict, but one indication is to analyse the popularity of the methodology and the granting or application for USCG type-approval.
The most popular combination is filtration and UV, which is used in 31 different ballast water management systems. It should be noted that seven of the 17 ballast water management systems that have achieved USCG type-approval used this methodology:
The second most often used combination is that of filtration and electrolysis/electrochlorination, which is a feature of 17 of the ballast water management systems listed. Six ballast water management systems using this methodology have achieved USCG type-approval:
After these two large sub-sets, there are 33 other methodologies that have five or fewer adherents. Using an indicator of USCG applied for or achieved type-approval reveals seven other methodologies:
Another indicator is the willingness of the USCG to grant Alternative Management System or AMS. According to the USCG, the AMS determination is an interim measure that allows foreign-administration-approved ballast water management systems, installed prior to the availability of Coast Guard type-approved ballast water management, to be used on a vessel for up to five years after the vessel would otherwise be required to comply with the discharge standard.
Under the Coast Guard regulations, an AMS may not be installed if a type-approved system is available for a given class or type of vessels, or for a specific vessel.
In 2018, the USCG indicated that there would be no more extensions of AMS. It was felt that there were enough different types of ballast water management systems available to cover most vessel types. Indeed, as at May 2019, it is likely that all the ballast water management systems currently under review will be granted type-approval status, bring the number of available ballast water management systems to 30.
So it was something of a surprise to see that in April 2019 three ballast water management systems had been granted AMS, which in theory gives them until 2024 to be type-approved.
Conversely, several ballast water management systems have lapsed AMS dates. In the majority of cases this is due to the ballast water management systems having achieved USCG type-approval status, but at least one ballast water management system appears to be dormant (AMS expired, no application for USCG type-approval). In theory, a vessel with this ballast water management system would not be allowed to de-ballast in US waters.