Increased cost of labour & spare parts raising machinery component of H&M

Main Engine Damage, the latest loss prevention report from The Swedish Club, sheds a light on an expensive category of damage that is all too frequent.

In the third Main Engine Damage report, the Club noted that statistically a vessel would suffer between one and two incidences of main engine damage during its life time.

“Considering the costly consequences for ship owners and their hull insurers, it is important to identify the main causes of this damage and examine how these can be prevented”, the Club said.

The study aims to put main engine damage claims into context by examining claims statistics for the Hull and Machinery (H&M) segment. It then examines in detail main engine damage claims – specifically frequency, vessel type, engine manufacturer, engine speed, damaged parts and cause of damage.

H&M claims by cost from 2010 to 2014 were 35% machinery and 65% ‘other’. From 2015 to 2017 this shifted to 48% machinery, 52% ‘other’. Partly this was due to increased cost for labour and spare parts, the report stated.

H&M claims by number were 52% machinery and 48% ‘other’ from 2010 to 2014, while from 2015 to 2017 the claims were 47% machinery and 53% ‘other’.

Both container and dry cargo vessels were overrepresented in H&M claims costs when compared with fleet entry. Dry cargo vessels had the highest frequency, followed by passenger vessels/ferries and container vessels.

Peter Stålberg, Senior Technical Advisor said that “our research shows that bulkers and tankers are the best performers for claims cost in comparison with Club entry. Most of these vessels have slow speed engines. Conversely passenger vessels/ferries have the highest frequency of main engine claims – 0.066 claims per vessel and year. Often these vessels have multiple medium speed engine installations. The same is also true for Ro-ro vessels.”

The Club experienced 734 machinery claims in the 2015-2017 period, totalling $384m. Main engine damage is the most expensive category with a total cost of $131m, contributing to 16% of the cost of all H&M claims and 34% of all machinery claims.

The average cost of main engine claims increased by 21% compared with the period 2010-2014, amounting to almost $650,000 per claim. An increase in costs was seen across the board in all machinery claims, due to the increase in cost for labour and spare parts

  • Costly rudder and rudder bearing damage affected the result for steering gear claims, which saw an average increase in cost of 53%.
  • The increase in the average deck equipment claims cost was because the number of offshore vessels with sophisticated deck equipment that the Club insures increased during the period 2015-2017.
  • On a positive note, the average claims cost for damaged turbochargers was reducing, a trend that had been apparent since the last publication. The industry move from ball bearings to plain bearings for the turbine rotor shafts might have contributed to this positive trend, the Club said.

The frequency of main engine claims for the last ten years had been stable at slightly above 0.02 claims per vessel. Swedish Club noted that, during the past 10 years, the Swedish Club had almost doubled its fleet, without any negative impact on the frequency.

The publication also includes loss prevention advice from major engine manufacturers, MAN Engines and Wärtsilä.

https://www.swedishclub.com/media_upload/files/Loss%20Prevention/Main%20Engine%20Damage%202018/TSC-main-engine-web%202018%20%281%29.pdf

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