Norwegian business upgrades its fleet in Klaipėda

Norwegian business upgrades its fleet in Klaipėda

Sea CargoWhile the world’s ship repair industry faced difficulties in 2014, Lithuanian ship repairers managed to successfully reach their goals. During 2014, the specialists of Western Shiprepair, a subsidiary of Western Shipyard, repaired 91 ships and achieved one of the principal goals of the company – more ship modernization orders were received.
While preparing for the market players’ rotation, Sea Cargo, a Norwegian shipping business market leader established in 2001, entrusted the Lithuanian ship repair company with the task of modernizing three Ro-Ro type ships. The pilot modernization project was performed on the Trans Carrier ship. Sea Cargo Managing Director Ole Saevild was satisfied with the quality of the work and completion time periods, which resulted in receiving two more orders. Another ship, Ahtela, was the second one to be delivered to the dock. A third ship – Express, due to ownership and name change procedures, had already arrived at Western Shiprepair before the new year, although its modernization work was planned to be performed a bit later. The ships’ advantage after modernization is obvious – cargos may be loaded to any pier independently, without additional costs.

According to Western Shiprepair Director Andrejus Babachinas, Sea Cargo, which ships more than 2.2 million tons of cargo per year, is a strategically important customer because the company has some ships of that type, which need to be modernized and adapted for the renewed pallet transport market. At present, the services provided by such ships are in demand and a continuous lack of ships can be felt. “The demand for the conversion and modernization of ships among large shipping companies has grown significantly, so we need to perform the orders we’ve received expeditiously and at a high level of quality. Trends show that the side loading system is back in fashion, and the demand for Ro-Ro type ships has grown and surpassed the supply. That is another new area where we are able to compete with other ship repair companies“, said A. Babachinas. It was also mentioned that the business strategy plans of all three ship repair companies of the BLRT Grupp concern (the Western Shiprepair, the Tallin Shipyard and the Turku Repair Yard) are to increase the scope of modernization projects. The installation of scrubbers, which are exhaust gas cleaning systems, is one of the ways of modernization projects. Recently, Estonian and Finnish ship repair companies installed scrubbers in four Ro-Ro type vessels of the Finnlines Company. The ship repair company of Finland installed the exhaust gas cleaning systems in two container ships of Langh Ships back in 2014.
The forecasts show that 2015 will bring lots of challenges to marine business in the Baltic Region due to the geopolitics and the increase in cargo shipping prices, which resulted from new, especially strict requirements for the discharge of sulphuric compounds from burnt ship fuel into the atmosphere, which entered into effect on the 1st of January specifically in the Baltic and North Sea regions, as well as for the English Channel. The discharge of sulphuric compounds in these regions was reduced by a factor of 10 – from 1% down to 0.1%, while remaining unchanged in other regions. However, this change may be of benefit to ship repair and modernization companies, since ship owners will have to replace ships that are incompliant with the new environmental requirements by gas powered vessels or install expensive exhaust gas cleaning equipment.
Western Shipyard Group Managing Director Arnoldas Šileika also sees positive prospects for the ship repair sector: “service growth and the attraction of prospective orders are first and foremost related to the planned development of the company’s infrastructure and investing into the purchase of a Panamax type dock. The company’s growth and development is related to future development projects involving the entire Western Shipyard Group’s infrastructure and new investments into a larger floating dock. At present, in cooperation with the Klaipėda State Seaport Authority, we are actively studying these possibilities“.
Shipbuilding and repairs are also most likely to be spurred by the fact that presently, Europe is in the process of active negotiations with the US regarding modification of the Jones Act on the Investment Agreement, regulating the amount of customs charges for ships built in Europe and exported to the US. Europe is not able to compete with the US because of the ships’ import customs charges applied to new ships that are built, repaired or modernized in Europe. The EU is actively negotiating with the US to have the Jones Act repealed, which would result in the growth of demand for shipbuilding and repairs in America. “Therefore, although the present situation is not bad, the future of our business is most likely to be even better, considering different forecasts and planned investments“, shared A. Šileika regarding his outlook for the future.

Additional information
Western Shiprepair is one of three ship repair companies in the BLRT Grupp. This group of ship repair companies, together with the Tallinn Shipyard and Turku Repair Yard, has become the leader in ship repair and modernization in the Baltic Sea region.
Companies of BLRT Grupp offer a wide range of services covering the entire life cycle of vessels - from design and construction to subsequent repair and disposal.