‘Cost-Effective Repairs: Synergy Between Ship Owner & Shipyard Perspectives’

Debashish Bir
Executive Director – Business Development & Alliance Management, Pipavav Defence & Offshore Engineering Company Ltd
All ships require periodic maintenance. India is strategically located in the Indian Ocean and hence, many ships from the nearby trade routes call on Indian ports. This means that there is a lot of potential for ship repair industry in India. Debashish Bir, Executive Director – Business Development & Alliance Management, Pipavav Defence & Offshore Engineering Company Ltd, talks about synergy between ship-owner and shipyard perspectives for achieving cost-effective ship repairs during SMP World Expo 2014. Excerpts:

A ship repair is an evergreen industry both at domestic and global level. It is going to continue evergreen irrespective of slowdown in shipping or Baltic Dry Index. Indian Shipping Industry has witnessed swelling in number of ships by way of Gross Register Tonnage (GRT) or Dead Weight Tonnage (DWT) over the last ten years. In the last decade, the total tonnage of ships globally has doubled. I would also like to mention here that ship repairs and ship building are two different activities although both are related to ships. But, the management techniques and process engineering in both the industries are grossly different.

Conducive Factors for Indian Ship Repairs Industry
India has domestic fleet expansion to 14 million GT by 2014. We also witness that inspections are becoming stringent and statutory requirements are ever increasing leading to many conversions, retrofits, and very high volume of repairs. Indian ship repairs industry has an edge over global competitors as we have a very large pool of skilled men in world like Singapore, Colombo and Dubai. We have Indian fleet of 780 ships. Having a huge coastline, the Indian ship repairs industry has the locational advantage of being able to facilitate both East and West Coasts.

Cost-Effective Ship Repairs
Every ship owner has a perspective about the cost of repairs. And every shipyard has perspective about the cost of repairs. When ship owner and shipyard’s perspectives merge, they actually result into cost effectiveness. The ship owner’s perspective primarily deals with cost and quality. The owner is ultimately interested in cost and the quality of repairs.

Owner’s Perspective
When we consider about cost, the governing factors are summarised.

The ship owner has to take into consideration cost of whole repairs, the revenue loss while the ship is undergoing repairs. He also thinks about whether ship will continue to incur the operational cost for the crew when it is operating during the repairs or under the repairs. The ship-owner will be highly concerned about any of the spilling over of the docking period. He has concerns about the mobilisation and demobilisation cost. Pre-repair survey is important while taking stock of the cost as it gives the clear picture of what actually involved in repairs and plays a very important role in deciding the cost factor. Repairs plan and PMS (Planned Maintenance System) lead to cost optimisation. This is owner’s perspective as far as cost is concerned.

Planned Maintenance System (PMS)
If we look at the Planned Maintenance System, the major issues are the laid up period reduction, man power engagement through Industrial engineering. During ship repairs, the ship owner looks for confined spaces for a multiple activities. So, the importance of industrial engineering is very important. It is necessary to have improved visibility of hull and machinery jobs for avoiding surprises. Unless we know the status of hull and machinery, it is extremely difficult to contain the repairing activities within time and cost. Efficient supply chain management also plays a key role as in the ship repairs industry the owner handles the most of the materials such as paints, spares, components, and any equipment for replacement whereas the shipyard normally caters to steel or consumables. Experience in superintendent is also one of the primary factors, which are governing the Planned Maintenance System.

Shipyard Perspective
The shipyard company takes into consideration cost minimisation & quicker turnaround while undertaking ship repairs work.

It is primarily concerned about minimising the cost, because by reducing the cost it can lead to competitiveness. It has also concerns over quicker turnaround, because dry-dock or facilities for dry-docking of ships can generate more revenues if it has the faster turnaround time. The owner is also interested to take out the ship as early as possible. The shipyard is also interested to achieve higher turnaround so that it can also maximise its revenue.

Governing Factors for Shipyard Perspective
Efficient infrastructure is of the utmost importance while undertaking ship repair work in shipyard. Without proper infrastructure, ship repairs activity is not feasible. Skilled labour pool is important to deliver the work in optimised timeframe. It also requires workshops and testing facilities. The shipyard must have a very strong QHSE (quality, health, safety, environment) policy as one accident or one bad job can cause disaster as per as shipyard’s credibility is concerned. Ship repair consists of multiple activities. So, global plan and closed monitoring are required for cost-effective ship repairs industry. The shipyard manager must keep tab on all the activities in the yard during ship repairs task. And vey important factor is Owner-Yard interface.

Shipyard Perspective Involving Type of Facilities & Services
Primary ship repairing includes hull and painting, mechanical assembly and testing, electrical workshops, load testing such as testing of anchors, MARPOL compliances, many tanker repairs , life extension and retrofits, which requires certain amount engineering to be done by the shipyard, and flying squads for ensuring guaranteed repairs for contingencies and emergency jobs.Any ship repairing company or any aspiring company must have these facilities to achieve efficiency while carrying out repair work.

Business focus of Shipyard
The Indian fleet consists of container ships, coastal vessels, dredgers, offshore fleets, MODU & MOPU, defence and Para Defence ships. After certain time period, these require regular maintenance and repairs.

Efficiency Measures of Shipyard
Efficiency of a shipyard can be gauged by its strong planning, competitive bidding for foray into international markets, pre-repair survey, cost estimation and finalisation, response of contingency (as contingencies happen in ship repairs), long-term value addition, supply chain, and efficient import. In case of spare imports, even if the spares are imported by ship owners, the shipyard must have the efficient system to import spare parts. Crew facility ensures shipyard efficiency. Every shipyard must have crew facility, because repairs can happen in cabin, toilets, kitchen, galley of a ship and it will require a standby facility.

Motivation of tradesman is also one the key factors for ensuring efficiency of a shipyard. The shipyard people require a very high level of training. Shipyard employees need incentives. Incentives inspire shipyard people for giving efficient production. Congenial work environment improves working conditions of workers in a shipyard. It means it must have ventilation for areas, where hot work is being carried out, and dehumidification for places where painting work is going on. Such environment is conducive for cost-effective repairs.

Market Potential
Historically, India was the largest ship repair industry in Asia in 70s. The global ship repair market is USD 12 billion today. India can target a lion share. As a ship repair industry, it has got the highest value addition. In shipbuilding, the country’s value addition is only 8 to 9 per cent where as in case of ship repairs, the input can be 80 to 90 per cent. So, a ship repair is good industry for India.

Competition for Indian Ship Repair Industry
The cost-effectiveness means competitiveness. So, India has to give an edge to its global competitors like China, Malaysia, Singapore, Dubai, Colombo and Vietnam. China has 176 ship repair units. The ship repair industry in Colombo and Dubai can deliver high efficiency. Singapore ship repairs industry has firmed its footprint on the global map by achieving high-tech capability as it is delivering very high-ended jobs. The ship repair industry in Malaysia and Vietnam is low cost.

Cost-effective of ship repairs can be achieved through synergy of owner’s and shipyard’s perspectives. Unless shipyard and ship owner’s perspectives match, the industry won’t be able to generate cost-effective repairs. It is of the utmost importance to have strong bondage between owner and shipyard at national level. Their national experience can be extended to international level for cost-effective ship repairs.

Case Study: Noble Kenneth Delaney
Noble Kenneth Delaney, which is an offshore drilling rig, had damaged due to punch through. The punch through had led to bending of legs of the rig in different directions. The owners and the class had decided to go for a major replacement of parts of legs, which were bent. The estimated cost was USD 30 million and estimated time for repairs was seven months.

The shipyard had proposed different methodology through engineering. Here the legs were proposed to be corrected by stress relieving of the cords and removing the bracings and replacing some of them. The effective time saved was by four months. The job was completed in three months’ time. The cost saving in this case was up to 80 per cent. This is the case of cost effectiveness by value addition by the ship repair company.

One can always say the ship repairs company lost its 80 per cent of the revenue. Here, the profitability of the ship repair company is much higher by gaining the client’s confidence.

Case Study: Randolf Yost
It is the case of pre-repair planning. While Randolf Yost vessel was already in the offshore field, the shipyard company assessed the detailed renewals. The shipyard adopted pre-fabrication concept that means all the plates or panels, which were required to be renewed, were fabricated inside the shipyard. Steel renewal data was lifted while the vessel was still in the offshore field. The shipyard used pre-fabrication method and achieved high daily renewal rate. When actually the vessel came for repairing, the workforce went on marking the places and pre-fabricated place was renewed.