Evening out the peaks and troughs

This has been followed by a need to make gains in efficiency in order to lower the fuel costs, and maintenance in order to make the most of the craft’s operational life – on top of which there are the difficulties thrown up by EU emissions legislation which is growing tighter and tighter, with something akin to the sword of Damocles hanging over those craft which run on HFO in the form of the drop to 0.1% sulphur fuel at the beginning of 2015.

The problem, as Vesa Marttinen of Wartsila explained, is that the initial investment is made upfront by the owner, so any modifications costs are borne by them while the operators who have chartered the boat are largely the ones to gain from these designed-in efficiencies.

So, Wartsila have been looking at not just the technical, hard design but also the whole question of how the costs are borne, and whether there are things that can be leveraged to give a better deal. Mr Marttinen explained that if you take all the benefits of having a ‘managed’ vessel, with an agreement that looks at tying in a long term charter, you can take some of the lumps and bumps out of the market, making for a more predictable cash flow for everyone concerned and stabilising, as much as possible, the outlook for both the owners and the charterers.

It can also mean lowering overall costs by as much as 30% for example on short sea ro-ro transportation. This is because bundling design innovations along with technology, service and business model agreements can benefit everyone. A long term three way contract that ties in a charterer both with a lifetime service provider as well as the owner means firstly, the charterer can gain a vessel that is closely fitted to its operational needs, benefitting from technical know how. Secondly, since somebody well established is guaranteeing the ongoing maintenance and support, this gives everyone the certainty that downtime will be kept to a minimum and operational hours will be kept up. An additional benefit is that on this basis there is a better deal to be had from both financial and insurance services.