The increasing emphasis on operational costs is bringing growing ship owner recognition of the role of independent marine diesel engine overhaul and maintenance providers, says Sarah Wade
These are undoubtedly difficult times for ship owners and fleet operators. Rising operating costs, tighter margins and the downturn in the oil and gas support sector means that greater focus is now being placed on finding cost savings and operating more efficiently wherever possible.
To illustrate this point, in a recent shipping costs survey, Moore Stephens has reported that after three years of successive small declines, vessel operating costs were expected to rise in both 2015 and 2016.
The survey is based on responses from key players in the international shipping industry, predominantly involving shipowners and managers in Europe and Asia. Responses to the survey revealed that vessel operating costs are expected to have risen by 2.8 per cent during 2015 and will grow further by 3.1 per cent during 2016.
The survey put these increased down to a combination of factors. These include new regulations, the high bargaining power of the oil majors, stricter rules regarding maintenance and repairs carried out in ports, the advent of more sophisticated onboard machinery, and increasing consolidation in the marine equipment and services sector, resulting in more negotiating power for fewer, larger companies.
These same overall trends were confirmed in another survey carried out by maritime research firm Drewry which also indicated that many owners had cut back on expenditure on repairs and maintenance in recent years and that some ‘catching up’ of overdue engine servicing could now be expected.
The reference to deferred maintenance is an interesting one for those involved in the supply of marine engine overhaul and repair services. In our own experience this is also precisely the area where some shipping companies faced with these commercial challenges are increasingly turning to specialist independents rather than the OEMs.
To illustrate this trend, in the last 12 months we have successfully established engine service framework agreements with a number of leading shipping companies, reflecting both the renewal and extension of existing agreements and success in winning newly issued contracts. In our view, the increased popularity of longer term framework agreements reflects how the identification of more cost effective engineering and maintenance solutions has become a key operational factor among ship owners.
In response, by using an independent, we estimate that ship operators can typically save around 30 per cent of typical OEM diesel engine service and maintenance costs without any compromise on the quality and standard of engineering work provided – and this is usually verified by rigorous technical audits and assessments of the providers’ diesel engineering capabilities.
How is this achieved? As a fully independent operation, diesel engine specialists like Royston are completely focused on the business of providing effective and high quality engine maintenance services to customers.
Internal working systems and procedures reflect this single-minded purpose and work processes are entirely geared to ensuring that all engine repair and service work is carried out efficiently, in line with the technical standards required and with close attention to planning and project management. This focus enables us to work closely with fleet operators to ensure that jobs are completed as quickly as possible and that vessel downtimes are reduced to a minimum.
In our own case, in fulfilling this role we are helped by the long standing relationships we have developed with the major high and medium speed diesel engine manufacturers. This has required considerable and ongoing investment to ensure that engineers are properly trained and fully qualified to OEM standards and can be relied upon to have the technical expertise needed to carry out all engine work efficiently and effectively. The availability of suitably experienced and skilled service engineers is also a key consideration and one which the OEMs can find challenging.
Official representative or main OEM agency status also gives an approved independent instant access to official online parts and ordering systems. As a result, all parts used on engine repair, maintenance and overhaul work are genuine and sourced through official OEM supply chains, eliminating worries over the use of inferior, ’grey market’ or counterfeit components. While the cost savings associated with the use of independent providers of engine services can therefore be significant, there are other advantages.
For example, established independents can often continue to offer parts and spares for older engines, and retain the specialist technical manuals and tool kits required for work on those engines that may be nearing obsolescence. These are often services that cannot be provided by an OEM.
Expertise on many different engine types, and their associated turbocharger and fuel injection combinations, also means independents have the technical capability to work across whole fleets rather than being restricted to one type of engine system. In this way, the ability to work across different vessels enables the independent to build up greater compatibility with ship operators’ maintenance systems, procurement processes and operational schedules – fostering more efficient working partnerships with customers.
In particular, the need to pay close attention to detail in the project management and planning of service jobs is a factor that should not be underestimated, particularly in current difficult maritime markets.
More than ever fleet owners value the availability of their vessels, meaning routine engine maintenance schedules must be optimised and planned very carefully. With customers having their own service account manager and dedicated support at every stage, independent suppliers are often much better placed to achieve this.
OEMs, understandably, have priority interests in manufacturing and new product development, sales of new engines and warranty support, whilst the independent service provider can be totally focused on providing a fully responsive engineering service that is geared towards meeting the specific timing, location and technical needs of a customer. In this way, with new pressures on operating costs and assured vessel availability, independents like Royston are responding to market needs.
In doing so they are successfully demonstrating their capability as a highly cost-effective and technically reliable alternative to the OEMs for post-warranty diesel engine repairs, servicing and overhauls.
Sarah Wade is CEO of Royston, a long established and expanding diesel engine supply, service and repair company. With bases in the UK and Perth, Western Australia, the company offers customers comprehensive drydock and on board engine repair and maintenance services as an affordable alternative to the OEMs.