Drydock ‘slip’ costs growing concern for shipowners

Installing a BWMS outside regular drydocking could add unexpected costs for shipowners. Credit: Damen Shipyards
Installing a BWMS outside regular drydocking could add unexpected costs for shipowners. Credit: Damen Shipyards

A US Coast Guard (USCG) blog post published with little fanfare earlier this year that explained a new policy on ballast water equipment installation extensions could turn out to have big cost ramifications for shipowners trading in the United States.

The posting, made on the USCG’s Maritime Commons website on 7 March, acknowledges that upcoming drydock dates can ‘slip’ by a day, a week, or more depending on circumstances both within and outside a shipowner’s control.

In some instances of a date slip, the USCG notes, owners have been requesting that their original equipment installation compliance extension (which the USCG began granting in 2015 because of a lack of US-certified ballast water equipment) be amended to reflect the slip.

“If a new extension is granted, it will likely be for 2.5 years from the date of the originally scheduled drydock date, rather than extending until the date of the next scheduled drydock”, according to the policy. A drydock survey takes place once every five years for most large commercial vessels.

For those shipowners that experience a date slip, the new policy essentially cut in half the amount of time they have to install a ballast water management system (BWMS). Shipowner representatives also assert that instead of installing the system on a ship’s regular drydock schedule, a special separate drydocking will have to be made to complete the installation.

Based on USCG data, there are approximately 12,000 vessels with extensions that terminate on the vessel’s entry to its next scheduled drydock, and thus could be susceptible to the stricter standard.

Jeanne Grasso, a partner with the law firm Blank Rome, said the new policy could cost shipowners up to USD500,000 or more in added drydock costs that they did not have to spend under on the previous “next-scheduled drydock date” policy.

“It’s huge policy difference that had only the warning of a blog post, not even a policy letter,” Grasso told IHS Markit. “That amount of money is not insignificant for some operators. And it’s going to come up a lot – it’s not uncommon to have a drydock delay of a few days.”

Kathy Metcalf, president of Chamber of Shipping of America, which represents foreign shipowners with US-based operations, said there could be legal ramifications with the new policy as well.

“The cost-benefit analysis made by the coastguard for this regulation [which went into effect in 2012] was made under the assumption that these systems would be installed during a scheduled drydocking outage already associated with a particular vessel,” Metcalf told IHS Markit. “The cost piece did not take into account equipment installed off-schedule. So the only way to get the coastguard to back off the new policy may be to litigate.”

Metcalf said she understands the USCG’s dilemma. “They feel like they’ve been yanked around by shipowners that haven’t been preparing sufficiently for this. But when you’re a shipowner that has a contract signed with a ballast water equipment manufacturer and you’re set up for installation during a certain outage, we just want to have the same amount of time we would have had but for a slight slip in the drydock schedule.”

In a 23-page formal Navigation and Vessel Inspection Certificate (NVIC) – issued a week before the blog post cited by Grasso and Metcalf – the agency explained that extensions “may be granted for no longer than the minimum time needed for the vessel to comply with the requirements”. It went on to note: “The extension will generally not be longer than 12 months from the vessel’s compliance date and may not necessarily coincide with the vessel’s next scheduled drydock date.”

Sean Brady, chief of the USCG’s Office of Operating and Environmental Standards, explained that for vessels that fail to meet their drydock date through a date slip, the extra 2.5 years would get the vessel to an interim survey – knowns as an Underwater Survey in Lieu of Drydocking (UWILD) – that can be carried out at a ship repair facility while the ship remains at berth.

“We surveyed ballast water manufacturers to find out the cost and how practical it is to do an installation in a UWILD, and a vast majority said they could work around the vessel operator’s schedule to begin installation,” Brady told IHS Markit. “Some manufacturers do require at least part of the installation to be during a drydock, but many others can install a significant amount of equipment” during an interim survey, he said.

Brady acknowledged that cutting in half the amount of extension time provided to vessels to install a BWMS could be viewed as needlessly penalising vessel owners – particularly those for whom a date slip was truly out of their control.

“It’s a valid argument that we’ve heard from a few owners, and we have a request for reconsideration pending that will be looked at closely. But it’s not valid for a shipowner that’s a week late because he happened to be conducting trade and didn’t bother to inform us. We’re not here to kick out boats, we’re here to help facilitate trade – safe trade, through compliance.”