As in the case of most areas of shipbuilding, the contracting boom of the mid-2000s allowed Chinese shipyards to gain market share in the OSV sector. Initially, however, this was limited to relatively simple units. More recently, Chinese yards have begun to construct more sophisticated vessels, with broader global appeal. At the same time, they have grown market share (53% of the OSV orderbook, versus 36% in 2008).
AHTS Demand Dries Up
Back in the boom years, although Chinese yards took many orders, the majority of these were from Asian owners for use in the benign waters of the East. Asian-designed ‘commodity’ AHTSs of around 5,150 bhp made up the bulk (55%) of these orders. Chinese yards were assisted in gaining a market share by
build-to-stock intermediaries, such as MAC, Coastal or Nam Cheong, which outsourced orders to Chinese yards with the prior intention of resale close to delivery. Meanwhile, European owners tended to restrict their ordering to established yards, for instance those in Norway, whose designs they knew and trusted.
In Asia, working for NOCs like Petronas, Pertamina and PTTEP, whose operations are mostly near-shore, these small OSVs could find a market. But both Chinese yards (keen to diversify their product mix) and Asian owners (keen to expand their business into new geographies) had an incentive to change approach.
In an effort to climb the value chain, Chinese yards began to licence OSV designs from European companies, such as Rolls-Royce, or Ulstein for example. Subsequent ordering of such designs has been focussed on larger PSVs – in 2013, 82% of orders for Chinese built PSVs 4,000+ dwt had European designs. Demand for these vessels outpaced that for AHTSs, as more deepwater and far-from-shore fields entered development, with PSVs being the vessel of choice for these remote operations. The yards’ previous (Asian) clients transferred their attention to these vessel types, keen to gain a slice of the action in areas like the North Sea, or West Africa. At the same time, non-Asian owners were encouraged to order at yards now offering designs which they recognised, at prices 20-30% lower than those offered by European shipyards. Between the start of 2010 and 2014, China’s OSV orderbook rose nearly fivefold, to 382 units (53% market share).
Of course, the trend towards China can only last if the vessels which they deliver meet with acceptance in the Atlantic oil producing regions. However, the signs are encouraging, with Chinese built vessels making up a large proportion of deliveries into internationally operated areas (33% in 2013). Of all Asian-built PSVs with European designs currently active, around 30% are employed in West Africa, whilst 30% of PSVs >3,000 dwt are working in NW Europe.
This is an evolving situation, which will become clearer as the large PSV orderbook delivers. For the time being, however, Chinese yards look to have risen to the challenge of becoming builders of OSVs attractive for global operations.