Lay-up Cost Savings

Overview

If freight or charter rates drop below the profit margin, laying up may be a practical solution.

The decision-making to lay up a vessel means that the cost savings need to be reviewed. Doing this ensures the correct lay-up solution is identified to keep the ship in the best condition for reactivation. When considering lay-up costs, initial lay-up & remobilisation charges add to the budget. A review of the planned maintenance system would also be advisable for longer-term hot or warm lay-up. A careful examination of hours-based maintenance since machinery is less frequently used.

Hot & Cold Layup Savings

As a starting point, the below table indicates what savings can be expected when considering lay-up. Reviewing the vessel’s monthly budget against these figures makes it possible to determine indicative budget savings.

layup cost reduction table

 

 

 

 

 

 

Fig 1. Potential lay-up cost savings.

Lay-up Regional Factors

It depends upon geographical location and popularity to a large extent in determining the lay-up costs. For example, European developed countries tend to cost more for both wharf & anchorages, while Asia charges less. However, more cost-effective solutions can be found in Europe for port and anchorage if required. In addition, many countries do not encourage cold lay-up but require minimum or lower manning. Because of this, the number of locations currently available for cold lay-up is reduced. Therefore, for long-term lay-up, Asia becomes more cost-effective, and clients tend to look favourably upon it, especially in coordination with a dry-dock. Speak to MLS about what is available in your preferred region.

Wharf Costs

The cost of a wharf, if available, is enormous for large tonnage ships. As such, lay-up and layover are generally completed at an anchorage. For smaller vessels, wharf charges may be viable. The most significant difference between anchorage and wharf charges is the wharf charge and port dues. Wharf charges are usually based upon the vessel’s length, and port dues are based upon tonnage. Shipyards consider lay-up but generally require dry-docking or extensive refit work to make it viable for them to consider undertaking lay-up. The advantage of conducting a lay-up alongside a wharf is that the deactivation time is reduced by about 70%. MLS was able to lay up an LNG carrier in Singapore in 10 days with shipyard staff. A mooring plan must be conducted, considering windage, known weather conditions in the area and tides.

Anchorage Costs

Anchorage costs are significantly reduced as the port and wharf charges are removed. However, there are extra demobilisation charges as the vessel needs to be supported by crew boats. Still, the cost is usually returned over one month compared to using a wharf. Additionally, materials required for mobilisation and demobilisation require a barge. Of note is that two working anchors are required at all times.