The shipyard sector in China generally is going through a transitional phase, as the government seeks to rationalise the industry and bring capacity more in line with demand. This is leading to some significant structural changes which are affecting the repair and conversion side
of the business, as well as newbuilding yards.
The most important manifestation of this change is the creation earlier this year of COSCO Shipping Heavy Industries Co. Limited (CSHICL), as a result of the merger between COSCO and China Shipping. This new business brings together the shipbuilding, repair and conversion activities of the two leading shipping groups, and these are mainly centred in and around the Yangtze River Delta, Pearl River Delta and Bohai Bay areas. The newly formed CSHICL comprises 13 large scale shipyards and over 20 service companies and it is estimated that the group has the capacity to carry out around 1,500 repair and conversion jobs a year.
The group now has much greater capability to take on major repair and conversion projects, capitalising on the synergies that exist between the various companies that now fall under the same umbrella company. A recent example was provided by extensive repairs to the 13,000TEU capacity containership MSC Daniela, which was undertaken jointly by the CIC Changxing Shipyard and COSCO Qidong Offshore. In this case the latter was able to provide the skilled welding specialists needed to carry out the necessary hatch cover repairs, which required different types of high tension, thick steel plate work, while the vessel was at the Changxing yard. This was a major, three-month long repair job on the container vessel, which had suffered severe fire damage in May this year. MSC Daniela was successfully redelivered to MSC, a regular customer of the CIC shipyard, in late August.
Meanwhile, the COSCO (Zhoushan) Shipyard, also now part of the CSHIC group, has been working on a major containership conversion for Danaos of Greece, shortening Singapore by around 42.6m. This follows the successful completion by the yard of a similar programme of work on the Greek owner’s Colombo earlier this year. Making the Panamax class vessels more viable and better suited for intra-Asian trades, the projects involved taking out a section covering 1.5 holds, and reconfiguring the fuel tanks. The vessels’ lengths were reduced by 15% and the nominal container capacity by 23%.
Another of the major repair yards in China is Yiu Lian Dockyard (Shekou), which is part of the China Merchants Industry Holding (CMIH) group. CMIH now has another shiprepair yard as a subsidiary, with the acquisition of a majority stake in the Zhejiang Eastern Shipyard Co. Ltd. (ZESCO) in July this year. ZESCO has two large graving docks, one measuring 360m x 76m, and another 310m long and 54m wide, and handled some 127 vessel repairs in the first half of 2017. Recently, it finished a Panamax conversion job on MOL Charisma in September, as well as several ballast water treatment system refits. It is understood that the new parent company plans to make ZESCO a specialist in FPSO conversions and cruiseship refits and repairs in future.
Meanwhile, the Yiu Lian yard has been busy with a number of notable projects, including two LNG carrier docking jobs — the first time it has carried out work on vessels of this type — and repairs to a floating crane. One of the LNG vessels to dock was the 18,550m3 Lucia Ambition, which, during a six week stay at the yard, went through a main steam turbine and turbine generator overhaul, boiler and cargo tank surveys, various valve and pump overhauls and a refit of a Kongsberg Custody Transfer System (CTS) system, as well as general repairs. The second LNG tanker was the 147,000m3 Min Lu, which was docked at the yard for four weeks for a similar package of overhauls, surveys and repairs.
For the floating crane, Hua Tian Long, Yiu Lian installed a DP2 system, upgraded existing engine room equipment and modified and refurbished the accommodation and bridge areas. The yard has also been very active in ballast water treatment system retrofits, carrying out over 40 projects to date, and is in the process of discussing some scrubber installations with several shipowners as well.
One of the Yiu Lian yard’s main target markets for the future is the cruiseship sector, where it has been investing and building up its capabilities for several years now. In particular it has modified one of its large graving docks to meet the requirements of large, modern cruiseships in areas such as water handling.
Overall, Yiu Lian Dockyard reports that 2017 has been very busy, with the yard handling 177 vessels over the first nine months of the year, up from 122 in the same period of 2016. One of the reasons for this upward trend, the company suggests, is that some shipping companies brought forward their drydocking schedules because of uncertainties surrounding the implementation of the ballast water convention. One of the most notable vessels to drydock with Yiu Lian so far this year was the world’s largest oil tanker, the 441,000dwt TI Europe, for Euronav of Belgium. The vessel spent around two weeks at the yard for its third special survey, general repairs and external blasting and silicone coating of the hull.
Shanghai-based Huaran Dadong Dockyard (HRDD), which is purely focussed on shiprepair and conversion, has so far not been involved in any of the ongoing Chinese shipyard rationalisation initiatives. Consistently one of the leading three repair and conversion facilities in China over the past 20 years, HRDD operates four floating docks, one graving dock, and 2,300m of alongside repair quays.
In recent times, HRDD has shifted its focus onto higher value projects, including LNG carrier repair and maintenance and cruiseship upgrades. Preparations for a role in the LNG sector were stepped up this year with the signing of training and technical assistance agreements with Gabadi of Spain and GTT of France, following on from investment in specialised facilities within the yard. HRDD also indicates that it is seeking more bulbous bow optimisation, ballast water treatment and exhaust gas scrubber system retrofits. It has in fact already fitted more than 40 ballast water systems and is preparing to take on more work of this type.
The yard reports an increased number of VLCC projects this year, including several for one of its regular customers, NYK of Japan. As well as its repair business, HRDD has a strong track record of vessel conversions. Last year, for example, it widened three vessels owned by NSB Niederelbe Schiffahrtsgesellschaft of Germany, and this was the first time a capacity increase has been achieved by widening the vessel from its centre line.