Vessel sharing in the OSV market is challenging but promising

Jun 7, 2023 | Blog

The demand for offshore supply vessels is increasing, but shipbuilding is slowing down. How can the industry tackle this challenge? Vessel sharing is a solution with rich potential.

In a tight market, it makes little sense to have vessels spending much of their time idle. It’s bad for fuel efficiency and bad for the environment. Yet, this is what often happens when offshore support vessels (OSVs) are on charter.

Vessel sharing could boost OSV utilisation and reduce fuel costs. However, there will be challenges, which is why it has not yet become an industry norm.

A common solution employed in the shipping industry, vessel sharing, has occasionally been discussed in offshore circles. A scheme was launched by Peterson with partners Maersk Oil, Petrofac and Dana Petroleum back in 2018.

In the depths of the COVID-19 pandemic, the idea of vessel-sharing OSVs was again raised amongst industry members, and in June 2020 Norwegian oil and gas operators Wintershall DEA Norge and Equinor signed a supply vessel-sharing agreement for the servicing of some of their North Sea assets. The idea was that cargo would be co-ordinated at a common port base, and the vessel would sail a fixed route between platforms.

Why would charterers adopt vessel sharing?

Today, the industry faces new obstacles. Current economic challenges and higher interest rates slow down the shipbuilding industry. Consequently, fewer vessels are available, even as demand continues to increase. With vessel prices going up, day rates have reached record highs and will probably continue to grow in the future.

However, the current contract model where a charterer hires exclusive use of a vessel for the contract period may prove costly enough to prompt a fresh appraisal of the upsides of vessel sharing. Sharing deck space on offshore vessels would help optimize deck space, enable sharing of vessel operational costs and reduce the carbon footprint of the goods delivered to their platforms. The result could be reduced costs and fewer voyages of vessels – therefore minimizing risk, fuel consumption and emissions at sea. Furthermore, fewer engine hours offer benefits such as reduced maintenance time and costs.

The idea of vessel sharing in the OSV sector might sound unbelievable, but of course it’s not. Companies like CMA CGM, Maersk and others each place delivery orders on a container vessel, optimizing the use of space, etc. Sharing vessels offshore would work in a similar way, although it might only be possible for certain types of deck cargo. One fundamental challenge is how to organize the collection of empty baskets, and other cargo, as well as the logistics of sharing costs. Offshore, we can transport many different things: containers, hoses, pipes, anchors and more.

Stanislas Oriot, Senior Marine consultant at Opsealog says: “Vessel-sharing agreements have the potential to be a win-win solution for offshore companies by increasing efficiency and reducing costs while also decreasing emissions. As demand for vessels increases, such agreements may become more attractive, but require clear frameworks and procedures to manage complexity and mitigate risks, such as safety, logistics, cybersecurity, and flexibility.”

Digitalization can enable vessel sharing

Supporting digital systems would be required to make this concept a viable reality. Data collection would help shipowners allocate costs fairly amongst the different cooperating charterers based on time spent at each location. However, today, there isn’t a data structure onboard the vessels that would enable such activities. “Digitalization could be an enabler if charterers used blockchain to track their cargo and obtain real-data updates on deck space and fuel consumption, says Oriot. “Digitalization could also support tracking cargo manifests, having all the documents centralized.”

Online platforms, data analytics, and automation solutions would support the new business model. They could even enable ship operators to expand their service offerings to include carbon accounting for their charterers’ scope 3 emissions. These digital tools would increase transparency, and greater data integration could present further new opportunities for reducing costs and emissions.

Why is vessel sharing not standard already?

While these benefits are worth striving for, the current roadblock to their success is having an appropriate means for allocating the cost of the vessel’s operation equitably between different charterers. There isn’t any framework for such activities regarding safety or operating procedures, which sometimes vary among charterers.

There could also be a concern that shared logistics could create delays. Controlling the logistics internally, as they have always done, allows charterers to better adapt to unpredictable events.

Cybersecurity is another issue that needs to be addressed. How will the companies involved share data in a safe and protected manner? This could certainly be another barrier to the adoption of vessel sharing.

In conclusion

Vessel sharing is not regulated or established in the offshore sector, but it will soon need to be considered. Data solutions that are capable of managing vessel and client information will soon be needed to allocate costs according to agreed terms, and provide the necessary security and transparency.

This is achievable. Technologies such as blockchain and the Internet of Things (IoT) form the basis of smart systems in other applications, and they could be adapted to the OSV market.

Vessel sharing could bring many benefits. The next step will be research, testing and technology to determine its real feasibility in the offshore services world.

References: https://www.oedigital.com/news/479217-wintershall-dea-equinor-sharing-platform-supply-vessel

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