Maritime salvage has become difficult. Since the last HANSA report on the industry (06/2014), the market has gone through a further decline of Lloyd‘s Open Form (LOF). Salvage incidents create less profit.
The question how to keep up providing service offerings on a smaller financial basis is starting to trouble the major[ds_preview] players in the international maritime salvage industry. Not that incidents were fast decreasing, it is the salvage business model that is becoming more demanding: larger ships, more environmental protection. With an increasing global merchant fleet and about 23mill. cruise passengers expected in 2015 globally, the risks are growing. Earning money with maritime salvage is becoming more difficult, though. The overall situation fuels speculation about a possible merger of the industry’s two big players Titan and Svitzer to form a new »global salvage giant« as professional journal TradeWinds reported in December.
The question is on the table whether highly professional specialized salvage services and advice service offerings will pay for themselves in the long run. According to the latest data from US analysing specialist IHS (Information Handling Services), a total of 1,639 maritime casualty incidents were reported during 2014. This is thus a 10% increase from 2013 when 1,489 incidents were reported.
Competition in salvage, however, is rough. Svitzer’s ambitious aims are confronted with smaller profit margins. Svitzer Salvage CEO Peter Pietka recently said he would not comment on market speculation of a possible merger of Svitzer and US salvage giant Titan. However, leading salvagers keep a low profile when confronted with questions on the state of the industry. On twitter, salvage companies celebrate new equipment. Resolve marine shows the successes of dismantling »Rena« and latest training facilities, but all the equipment costs.
As for the US market, new salvage opportunities and »underwater opportunities« were predicted in the trade press in October. Aging infrastructure and stricter environmental regulations would thus keep salvors busy. But the recovery of anchor structures or work at piers is a promising business area rather for smaller companies. In January the American Salvage Association has expanded its claim beyond the continental United States, to include North, South and Central America. This step from a U.S.-centric organization to one in which the interests of salvors throughout a larger area are considered is more than a coincidence. The new angle is a reference to an industry in search for new markets and partners. In January, Lindsay Malen, Titan’s director of business development adressed another challenge to salvage: »There is a shortage of seafarers and maritime support personnel«.
Searching for new partners
The growing importance of liability and insurance issues inspired salvors to strengthen ties with the insurance industry. At the last Annual General Meeting of the International Salvage Union (ISU) this trend was obvious. Leendert Muller, President of ISU and Managing Director of Dutch salvage and towage company, Multraship, said: »One of the things which we have committed to do is to continue to build our relationship with the property insurers and others in the insurance industry.« The industry’s search for new partners and the urge towards a distribution of market risks is still going on. At the Asian Marine Casualty Forum announced to be held in Singapore in April dramatically escalating cost of salvage and wreck removal and the salvage of mega ships will be most acute questions on the agenda.
The problems of today may explain why the big success of the removal of »Costa Concordia« is still inspiring maritime salvage. Here, in international cooperation, this case showed there is a lot of potential. Titan Salvage is still feeding on this milestone in the industry organized as a joint venture of Titan and Micoperi. Patrick Keenan, Director of Operations, called the Costa Concordia removal »high-tech salvage«. »The salvage industry will be challenged in the future to respond to very large vessels in precarious situations in remote areas,« he said. The trend towards more complex salvage incidents is going on. The Costa Concordia removal also demonstrated that cooperation is
the only option in such big cases and maybe also a general concept for the future: multinational teams of several salvagers were key to success instead of national competition.
Sverre Gutschmidt
