Repair yards expand capacity and diversify their customer base as business improves.
(Article originally published in May/June 2023 edition.)
A global look at the ship repair business shows that newbuilds are the focus in China, maintenance and retrofitting are getting all the attention in Europe while in the U.S. repairers are trying to diversify their market base with the only significant newbuilds coming in the form of government contracts.
For the past decade, the U.S. has focused primarily on repairs, and this past year has been no different except for a welcome uptick in reactivations of oilfield support vessels. Globally, shipbuilders are capitalizing on the past three years of deferred maintenance as well as tanker and cruise ships reaching the end of their working life.
One challenge for U.S. ship repairers is how to best optimize time and resources between the few limited government contracts and making room for commercial repairs. Gulf of Mexico yards are benefiting from renewed oil and gas activity in a climate of labor and supply shortages while trying, at the same time, to win government contracts. Yard and drydock spaces are filling up in the U.S., but it’s anyone’s guess how long this will last due to the fluctuating nature of offshore oil and gas prices.
The U.S. Gulf Coast is on a roll. One company, Gulf Copper, is staying busy with the high-profile refurbishment of the iconic Battleship Texas, the only surviving ship to have served in both World War I and World War II. The contract began last August with the vessel’s transit from her berth in Galveston to Gulf Copper’s drydock in Houston, and for the past year the employee owners of Gulf Copper have been diligently restoring the century-old dreadnought. Their efforts have impressed the Battleship Texas Foundation to the extent that Gulf Copper was awarded an increase in the scope of the restoration and a six-month extension of the project.
Gulf Copper’s facilities include yards in Corpus Christi, Houston, Galveston and Port Arthur, Texas as well as Norfolk, Virginia.
In Morgan City, the epicenter of the Gulf of Mexico oil and gas industry, repair yards are active with orders picking up. A drone’s eye view of the larger yards reveals ongoing repair work and periodic dockings of oil spill response vessels, platform support vessels and lift boats.
Austal USA, based out of Mobile, Alabama, has recently been contracted to build seven ocean surveillance ships for the U.S. Navy while smaller yards in the area are busy building workboats, inland barges and smaller government vessels.
Away from the offshore oil fields, repair yards are expanding capacity to meet the requirements for servicing foreign-flag, deep-draft ships and better compete for U.S. Navy contracts. Some are speculating that with higher cargo volumes and a weaker U.S. dollar, international shipowners are choosing U.S. shipyards to carry out repairs and mandated dockings.
Colonna’s Shipyard in Norfolk, Virginia exemplifies this by carrying out services for the Navy, USCG, Army, commercial fishing vessels, dredges and tugs and barges. It offers a full range of services including in-house welding, fabrication, marine electrician services, rigging and crane operations. Colonna’s thrives on the diversity of its customer base and recently completed the acquisition of Accurity Industrial Contractors, expanding its footprint into Owensboro, Kentucky. Colonna’s expects a steady increase in volume from the commercial sector and is well-positioned to service the growing number of cargo vessels transiting the East Coast.
Detyens Shipyards, based out of Charleston, South Carolina, provides services for private sector fleets as well as for non-commissioned ships that support the U.S. Navy (USNS fleet). Its diversified customer base helped ensure a steady workload during the COVID epidemic, and business continues to improve. In 2023 alone, Detyens has serviced Dutch, Greek and Japanese shipowners and anticipates increased work orders from the deep-draft community as a result of maintenance and repair deferments during COVID.
The biggest challenge facing ship repairers like Detyens these days is the shortage of skilled labor – everything from welders, naval architects, carpenters and machinists to the marine crew on its company-owned tugboats. To meet this challenge, Detyens is aggressively pursuing an apprenticeship program for all the shipyard trades. An investment of thirty thousand dollars has been dedicated just to the marketing of the apprenticeship program in 2023.
Worldwide, the situation is much the same with growing demand for ship repairers. After all, shipowners can’t defer repairs and retrofits forever, and companies like Genova Industrie Navali in Italy are benefiting, beginning 2023 with work orders for ferries, the offshore pipe layer Saipem Castorone, and the USS Mount Whitney.
A leading player in the Mediterranean, the Genova Industrie Navali group is made up of two historic yards in Genoa, Italy, a yard in Livorno, Italy and the Chantier Naval de Marseille yard in Marseille, France. The Marseille yard boasts the largest dock in the Mediterranean and can accommodate any ship class. After the recent acquisition of additional area, it’s ideally situated to grab a good share of the expected future market for newbuild cruise ships and major overhaul and retrofit projects.
Over the past several years, there’ve been growing reports about the increasing prowess of Chinese shipbuilders, due in no small part to China’s push to ramp up its naval power as well as its offshore oil and gas capabilities. Since 2019, China State Shipbuilding Corporation (CSSC) has constructed a variety of vessel types including aircraft carriers, ultra-large container ships, dual-fuel new generation LNG tankers and even large-scale passenger vessels.
The recent order secured by another Chinese yard, Dalian Shipbuilding Industry (DSIC), of ten newbuild oil tankers from Greek owner Dynacom illustrates how military-purposed industrial capabilities can be redirected to other opportunities. In much the same way that U.S. ship repairers in the Gulf of Mexico are taking full advantage of the resurgent oil and gas industry, China has diversified its customer base to commercial tankers.
Chinese shipbuilders are operating full throttle to produce tankers for both domestic and international customers. CSSC and its subsidiaries have newbuild orders for bulk carriers and tankers lined up through 2027. For China, the business of new construction is booming.
The ship repair business extends beyond just the yards. The often-overlooked service of commercial diving is also an important catalyst for keeping marine transportation moving and a contributor to the safety of vessel crews.
U.S.-based Phoenix International, for example, provides 24/7 emergency global support to both the U.S. Navy and commercial clients. The company has developed a rigorous program ensuring that its divers are certified inspectors qualified in the various underwater welding techniques in accordance with the U.S. Navy and every global shipping classification society, including installing subsea cofferdams to perform dry welds or perform shaft seal changeouts.
While the bulk of its customer base is the U.S. Navy, Phoenix regularly responds to private sector shipping with the same level of efficiency it provides the Navy as evidenced this past January when Phoenix divers responded to repair the damaged propellor of a Saudi-owned tanker, the result of a harbor tug collision near the Port of Corpus Christi, Texas.
Phoenix is a ship’s husbandry company that performs its work with vessels afloat. They’re specialists who perform many of the same tasks as traditional shipyards but under an alternative set of circumstances. Shipowners are well-advised to consider specialist commercial dive contractors like Phoenix for not only emergency response calls but also as a potential alternative to waiting in the queue for a backlogged yard.
Diversifying the Customer Base
As of right now, midway through 2023, the business for ship repairers is steady and growing. There are contracts and even backlogs for some, but it doesn’t feel like a boom – yet. In the U.S., the volume of repair work orders is increasing and business is good – good enough for shipyards to increase capacity and invest time and capital in developing their skilled labor forces.
The key to ongoing success is a diversified customer base, striking the right balance between military and commercial contracts. One can look at Gulf Copper, Detyens, Colonna’s and every West Coast shipyard and conclude that diversification of customer base is the long-term goal.
Globally, shipowners are beginning to realize that the clock is ticking with respect to deferring maintenance and extending lifecycles. In China, shipbuilding is picking up with no end in sight. With state assistance, the shipyards of China have positioned themselves to simultaneously win government contracts and complete repairs for all classes and types of commercial vessels. It appears that China’s shipyards have accomplished what the resilient shipyards of the U.S. are someday hoping for – to operate above the competition of the boom-and-bust cycle.
Freelance writer Pat Zeitler is a commercial diver and former reserve officer in the USCG. This is his first appearance in the magazine.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.