Crunching The Numbers For BWTS
Going green is impacting the cost structure of the maritime industry and with the adoption of the Ballast Water Management Convention (BWMC), is now bringing an added expenditure. What impact is this having for shipowners and operators?
The maritime industry along with other industries has faced an economic turmoil and more recently the disruption the COVID-19 pandemic. The overarching driving force from legislation is pushing the industry to be more environmentally friendly and cut its emissions significantly.
Adoption of Ballast Water Treatment Systems (BWTS) is aimed at eliminating the transfer of invasive species across the oceans. As cited in Ballast Water Treatment Systems (BWTS) Global Market Outlook (2019-2027)*, in 2019 the global market for BWTS was worth US$38.43 billion and is expected to grow by 34.9% over the following six years, where it is expected to reach US$420.52 billion in 2027. It has been estimated that prices for BWTS vary in range from US$500,000 to US$3 million, depending on size and specification.
Factors that will be creating this growth in the coming years will be the maritime trade volume, government initiative and regulations, along with further awareness and utilization of technology. Currently, the price for ballast water systems is still high for many industry participants but as the technology evolves it is expected to decrease.
The BWMC and BWTS are now well-known in the industry, but the adoption of this technology has been slow, due to shipowners’ technical and financial reasons.
Shipowners have been trying to delay the installation of BWTS as long as possible. Ingmar Loges, Managing Director, Newport Shipping explains that: “It is the simple fact of cost and the investment is required at a time when shipping markets, although generally improved in some segments, have gone through difficult times.”
Improving environmental credentials hasn’t been easy for those who have been early adopters. “Many early adopters have found that the systems they installed did not work as advertised, and in more extreme cases were deemed ‘inoperable’,” comments Loges.
Financially there has been limited support for shipowners from the financial institutions, due to the fact that bank finance has been scarce and the institutions have considered amounts small. Loges notes that a bank that is financing a vessel may also grant a line of finance for BWTS costs. The challenge is particularly demanding for smaller shipowners, as it difficult for them to negotiate favourable payment terms or good discounts from BWTS manufacturers.
Adding to this has been the pandemic which has deeply affected the logistics chain through restrictions in transportation, which has seen BWTS installations being postponed. Loges comments: “It is expected that China's ship repair and maintenance sector will see a robust period this year.”
However, shipowners still need to implement these systems in order to be compliant with the BWMC. There is also increasing awareness of environmental concerns and growing consumer and industrial interest is driving the use of clean energy resources.
Finding the financial solution
The development of BWTS has managed to gain support through research funding, however, no such support is available for shipowners for adopting this technology. Today the installation of a BWTS is solely the responsibility of the shipowner.
Initiatives such as the Poseidon Principles implementation may now see institutions have appetite to start offering more favourable terms to customers that are implementing green technology.
Newport Maritime Services (NMS) is helping shipowners tackle this financial conundrum by offering a solution that will help ease the financial burden of BWTS installations. Through its cooperation agreements with reputable BWTS manufacturers, Newport Shipping is able to offer attractive extended payment terms.
NMS is also assisting customers with their ballast water retrofitting needs as a one-stop shop service provider and integrator. It offers a full project management package from design through to installation for BWTS.
* Ballast Water Treatment Systems (BWTS) - Global Market Outlook (2019-2027), Research and Markets.
