The International Salvage Union (ISU) statistics for 2017, published yesterday, June 28th, have shown that the salvage industry was continuing to experience weak revenues, although up from 2016.
Gross revenue for ISU members for the year was $456m, with revenues up 20% year on year.
The number of Lloyd’s Open Form (LOF) cases rose, but LOF revenue and average LOF income was down. Revenue from LOF cases in 2017 was $54m, which was the lowest since 1999, and continued the downward trend of LOF.
The number of LOF cases that realized revenue in 2017 for ISU members was 46 – up from 34 cases in 2016. However, the increase in cases and decrease in LOF revenues meant that the average revenue from each LOF case, including SCOPIC revenue, fell, and was $1.6m, down from $3.9m the previous year.
The total of LOF salved values was nearly $1bn and the average LOF salved value was $21m. Therefore the average income (excluding SCOPIC payments) for each LOF case – both settlements and arbitrators’ awards – was 5.6% of the salved value, the lowest on record.
Revenue from LOF cases represented 31% of all “dry” salvage revenue and LOF cases accounted for 18% of all “dry” salvage cases in 2017. Ten years ago, LOF revenue represented more than 70% of “dry” salvage income and 34% of cases. Both numbers confirm the continuing decline in the financial significance of LOF over the past few years, ISU said.
Revenue in 2017 from operations conducted under contracts other than LOF was $119m – up from $75m the previous year. Average revenue from non-LOF contracts was $580,000 per case. ISU said that this reflected the continuing trend for commercial contracts to be used in place of LOF.
SCOPIC revenue fell to an all-time low, with revenue of $20m, down from some $60m the previous year and the lowest annual SCOPIC revenue since SCOPIC was introduced in 1999.
Wreck removal income had grown during the past decade. In 2017 there were 120 operations that produced income of $264m – 58% of total income. This compared with $172m in 2016.
ISU said that the industry had recovered slightly from the low point of 2016, but revenues were not approaching the levels of 2013, 2014 and 2015, when annual income was more than $700m.
The total number of “dry” salvage services (emergency response as opposed to wreck removal) in 2017 was 251, down from a two-decade-high of 306 operations in 2016.
The numbers do not include the revenues of non-ISU members and can include revenue provided for services in previous year.
The statistics are collected confidentially from all ISU members, aggregated and analysed by a third party.
The statistics are for gross revenues from which all of the salvors’ costs must be met.
ISU President, Ms Charo Coll, said that “the 2017 ISU statistics again show the variability of our industry. Yes, the total revenue of $456m was an increase on the previous year, but that is still far from the $717m of two years ago.”
Coll said that the industry continued to be active, continued to invest and continued to be effective in helping to mitigate loss for ship owners and insurers. But, at the same time, ISU members were also experiencing financial hardship. “The forces of competition may be making salvors undertake cases for lower returns and there may be pressure from owners and insurers to drive down costs. LOF revenue is much reduced and a contributing factor could be the increased use of ‘side agreements’. It is ISU’s understanding that these are used to reduce LOF awards and settlements. It is vital for world trade that there is a well-resourced and capable marine salvage industry available to save life, protect the environment and save property and we encourage the shipping industry to support its professional salvage providers”, she said.
http://www.standard-club.com/media/2734861/isu-statistics-2017-news-release.pdf
Graphics at:
http://www.standard-club.com/media/2734860/isu-statistics-1999-2017.pdf