Assessing future fortunes for tugs

Offshore support vessels cover a range of vessel types, many with no towing capabilities, towage within the sector perhaps best represented by anchor-handling tugs within the oil and gas industry joined more recently by offshore wind in providing opportunities for vessels capable of towing. One-tier down from vessels employed directly (ie moving and positioning rigs and platforms) is the cascade effect of connected work including barge movements for the offshore industry by tugs of all shapes and sizes. While the bulk of each market (OSV and tug) is distinct from each other there will therefore be a crossover in some areas.

Century Marine mentions the “over exuberance” of speculation in offshore tonnage between 2004 and 2014 with newbuilding prices for tugs and OSVs at levels that would now be considered unrealistic, a situation that lead to substantial oversupply. The offshore market has not yet recovered from the 2014 oil price fall and Century state it is only now that the tug market is showing signs of some stability.

In some cases tug values are back to normal or near normal depreciation over the year, particularly with harbour/terminal tugs where, while there is pressure on rates, new projects and fleet replacements have absorbed much of that pressure with over-speculation of harbour tugs never having been to the extent of the OSV market.

Twin-screw tugs in the ocean-towing and construction sector continue to suffer from subdued rates with deck barge activity very low while fewer ports are accepting conventional twin-screw harbour tugs. However, Century also predicts “brighter skies on the horizon” with major projects in the Middle East and SE Asia being tendered that will require a substantial number of conventional twin-screw tugs and deck barges which could potentially remove over-supply problems for the foreseeable future.

Summing up, this interesting insight from Century Marine states that there are good reasons to be optimistic about both OSV and tug markets but it would be precipitous to say they have bottomed out. It finishes by reminding the reader that while the shipbroker has many skills, using a crystal ball is not one of them!

By Peter Barker