Reactivation of OSVs, a trend that is strengthening across the globe
Over the last year a strong reduction of stacked OSVs has been observed with a drop of -17% approximately. The once over-supplied sector is facing a much tighter supply of available tonnage. The total number of vessels in the world has contracted as many OSVs have abandoned the market, around 77 vessels had been scrapped whilst 34 had been converted since January 2021. Companies are using the current opportunity to sell their laid-up vessels since the price can be set slightly higher due to increased demand for supply vessels. Other than to reduce operational cost, companies are selling vessels to exit the OSVs industry.
Improving activity in the offshore oil and gas sector favoured the recovery of the OSV industry both in terms of utilisation and average day rates. This boost in OSV demand has not only come from the increasing activity in the oil and gas industry, but there are other industries that are driving demand for skilled labor. The increasing need for OSVs has encouraged companies to reactivate vessels to fulfill the demand.
The rapid reactivation of a considerable number of stacked OSVs can also pose a threat if too many are brought back to the market at once, resulting in an oversupply which could put pressure on utilisation and day rates. It is important mentioning that the trend has not reached all the regions equally and differs among OSVs types. New generation high spec PSVs (4,000+ dwt) are in highest demand. Market conditions have shifted; Operators now find themselves competing for the best equipment. Offshore service providers now have the leverage to ask for higher dayrates.
The latest edition of S&P Global's "Offshore Marine Monthly" has just been published, examining the current situation of the OSV sector by region, vessel type and size. This comprehensive report contains vital analysis from our regional experts, and is a must read for anyone involved in the OSV sector.
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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