Many wealthy ship owners have seen their livelihoods flipped upside down as a result of the recent drop in oil prices. Merchant ships have no choice but to cut costs and put their boats up for sale or lay-up as profits decline. Similarly, the maritime and offshore sectors have been impacted. As a result, several large and even small offshore oil enterprises with a significant maritime fleet have temporarily shut down to avoid their operations going aground.
The word ‘Lay-up’ or ‘Lay-up’ of ships refers to ships that have been put out of productive service temporarily due to a lack of contract or cargo. Increases in freight charges are sometimes insufficient to cover the ships’ operating costs. ‘Laying up’ ships makes sense to the operators during such difficult times. You can find out more on cold lay up malaysia here.
During this non-profitable period, a lay-up is used to lower the company’s overheads, such as ship equipment wear and tear, staffing costs, fuel, and insurance costs. When compared to the sale of ships during a drought, lay-up is almost always a more sustainable alternative. Owners are sometimes forced to allow repairs or even consider docking their vessels due to lay-up.
The procedures of putting up the vessels are known as ‘Hot Lay up’ and ‘Cold Lay up.’ The ship is out of service during a Hot Lay-up, but it can be deployed into duty at any time. In cold lay up, the vessel is tethered or anchored in a secure location while waiting for fresh work or contract. Out-of-service ships require a secure haven for their non-working status, which necessitates meticulous preparation. The most critical component in ship lay-up is deciding on a location.
The concept behind laying up at safe locations would be to provide safety for the crew, security for the vessel, and environmental protection. It also serves to protect the vessel structure from corrosive environments and machinery wear and tear.
Sites will be chosen on the basis of:
- Safeguard from open seas, winds, and weather to avoid unnecessary structural damage that could prove costly for the already shaky company.
- Security and its implementation influence at the site whether the area has an adequate backup plan in accordance with ISPS, SOLAS, and ISM regulations.
- Close proximity to trading and working areas for easy re-mobilization during Hot-Lay up periods. Because of their tactical and geographically advantageous locations, areas near Singapore, Gibraltar, and Rotterdam, for example, are hotbeds for easy business revival.
- If repairs or docking are to be performed, repair workshops, spares, and stores must be available.
- Access to general and convenience services such as fresh water, provisions, and fuel as needed for operational reasons, as these may become scarce during long lay up periods.
Nonetheless, vessels that are laid up are deemed unprofitable by certain companies and sometimes represent a negative asset value. It just so happens that the company has the option of allowing ships to lay up or selling them.