2018 Shiprepairing Industr y:Advancing in Wind and Rain,Growing in Change

By Wang Jin

At the end of 2018， waiting， joy and anxiety are intermingled， leaving the best note for looking back at the year for China's ship repairing industry. The lacklustre routine repair market finally ushered in a rebound in the second half of the year. Large-quantities retrofitting projects common in the past were becoming rare， but the new business field has gradually become a new “world” for ship repairing enterprises. While fighting against the market waves， the urgency of green development was growing day by day. The experience of the past year has proved that China's ship repairing industry can only promote its long-term and healthy development by constantly making changes in line with the needs of the times and industry development.

Looking back at 2018， the external environment of the ship repairing industry is not optimistic. Some sub-segments of the shipping market have recovered， but the total shipping capacity is too large，excess capacity has not been resolved.Aging ships face elimination， ships are getting younger， with adverse effects on the ship repairing industry. Ship repairing industry players believe that as a result of Sino-US trade friction， the ship repairing industry serving the shipping industry surely will be affected accordingly.

From the industry point of view，domestic ship repairing capacity is still in overcapacity， with very fierce competition.While the cost of repairing ships is far lower than that of Southeast Asian countries such as Singapore and Malaysia，there is a practice of final discount in the Chinese ship repairing industry. The competition among domestic shipyards is not only the competition of price，but also the competition of hardware facilities， service level， repair ability and comprehensive management level.

Fortunately， 2018 is the bumper year of the ship repair market. Due to the peak of conventional dock repair in 2015， the valid certificate of intermediate inspection for ship repair that year expires in the second half of 2018. As a result， industry players widely believed that after the 2018 Spring Festival， the number of regular repair ships would start to increase significantly， and the repair market will usher in another regular dock repair climax.

However， the recovery of the ship repair market did not appear as scheduled. According to statistics from the 66th Conference of SPCC for Chinese ship repairing enterprise， from January to September 2018， 18 ship repairing enterprises completed a total output value of 9.822 billion yuan， a decline of 7.6 percent over the same period last year，and a total of 3261 ships were completed.Compared with the same period last year，it decreased by 11.3%. At the same time，industry organization statistics show that the output value of national ship repair fell 7.3 percent year on year， and export output value fell 7 percent year on year. It is the main characteristic of the market of repairing ships in the first three quarters that the regular repair competition is fierce and the repair price is difficult to return to the normal level.

Optimizing the product structure and improving business grade is the only way to transition and development. At present，a number of domestic ship repairing companies have successfully entered the luxury cruise repair market. In 2018，the world's top luxury cruise company repair and retrofitting projects have been completed in China. Ship repairing companies also expand their repair business to new areas such as super-large container ships， LNG carriers， LPG tanks，pipe-laying vessels， and so on. In October this year， a large overseas LNG ship owner successfully completed a 27-day special inspection and repair for the last 15 years in a ship repair enterprise in Shenzhen.The routine repair project for LNG ship has gradually become the main business of the company.

In 2018， ballast water treatment plant and desulfurization tower installation business performance was extremely active. By the end of October this year，more than 50 ships had been installed with ballast water treatment units. Among them， a large enterprise statistics at the beginning of this year show ballast water treatment plant installation orders reached 6-7 ships， and the year is expected to complete installation of about 80 ships.Another Shanghai company completed plant installation on board 12 ships in 2017， twice as many as last year. The only ship repairing company not yet involved in this area was limited by factors such as the opening of ports for foreign ships.

The ballast water treatment unit is installed on 2-3 ships a month on average，becoming the normal condition of many ship repairing enterprises. According to the responsible person of the Ship Repair Branch of the China Shipbuilding Industry Association， the Chinese government has formally ratified the Ballast Water Management Convention， and the demand for retrofitting will be more and more vigorous in the later period.

Although the installation of desulfurization tower with even higher“gold content” just started， it witnessed rapid development momentum. It is understood that 2019 desulfurization tower installation business orders have been filled in a number of ship repair enterprises， orders range from about 50 to more than 100 ships. Some enterprises choose to accept orders up to June 2020，others do not rush to confirm the contract with shipowners， temporarily do not consider orders for 2020. Next year， a large number of shipowners will also choose to install desulfurization towers， ballast water treatment units and conventional docking works at the same time.

At present， many ship repair enterprises have delivered the first ship in the desulfurization tower installation business. Although there are different types of ship， but the retrofitting period is generally about 30 days. A backbone company has completed as many as seven ships， and retrofitting costs of the projects range between $500000-$1.5 million.

By comprehensive judgment， the 2019 ship repair market will sweep the downturn and continue to improve. The ship repairing industry players hold the future shipyard may face the situation of short supply， expenses of the routine repair， the ballast water treatment unit and the desulphurizing tower installation and so on will all rise， and it is imperative that ship repair enterprises will review the situation and adjust their respective production management strategies.

At present， various localities are vigorously practicing the concept of“Lucid waters and lush mountains are invaluable assets”， continuously advancing the pollution prevention and control battle， and environmental protection policies are continuing to step up. For example， the three-year plan(2018-2020) of action for solid waste pollution control in Guangdong Province has been published， and some parts of Guangdong Province have launched a special campaign for the detection and treatment of solid waste for several months this year. Shanghai， Jiangsu， Zhejiang and other areas have also formulated corresponding policies and adopted measures such as special treatment，standardized management supervision and assessment of hazardous waste， and solid waste pollution control has been incorporated into annual assessment of the government and departments.

In this context， the overall promotion of green ship repair is facing many challenges. Industry analysts say the traditional ship repair technology and process can hardly adapt to the requirements of pollution prevention and control， ship repair produced solid waste recycling is very difficult， and the current regulatory requirements are not clear about whether the ship repair solid waste is imported waste.

As a result， ship repair enterprises feel unprecedented pressure. Some ship repair enterprises are limited in production period and construction technology to varying degrees. Paint buckets， oil sludge and other solid waste must be treated locally， and such treatment is increasingly expensive. Some ship repair enterprises can not completely release their production capacity because of the small selection range of ship type and workload when receiving an order.In the view of ship repairing enterprises，environmental protection has become a key factor in its sustainable development.

Ship repairing enterprises are actively changing their operation mode，using new technologies， such as superhigh pressure water instead of sand blasting to eliminate the generation of waste sand; accurate calculation of engineering material requirements，reasonable allocation of materials use;establish and implement the production system of clean-up during production and garbage classification system，strengthen the pollution prevention and control system. More strict requirements are made for the recovery and treatment of dangerous wastes.Special collecting cabinets are set up to collect sludge from ballast tanks，special containers are set up to hold and collect brush plating solutions， and these dangerous wastes are treated in accordance with regulations.