TSAVLIRIS SALVAGE GROUP - News & Announcements
ISU statistics: The salvage industry in 2017 - 2018 Jun 27
The International Salvage Union published today its annual statistics for 2017:
- Gross revenue for ISU members - US$ 456 million
- Revenues up 20% on 2016
- Number of LOF cases is up but LOF revenue and average LOF income down
- SCOPIC revenue at an all time low
- Wreck removal income - US$ 264 million, 58% of total income
Tthe industry has recovered slightly
The industry continues to be active, continues to invest and continues to
mitigate loss for ship owners and insurers.
The statistics show that the industry has recovered slightly from the low point of 2016
but revenues are not approaching the levels of 2013, 2014 and 2015 when annual
income was more than US$ 700 million.
The total number of "dry" salvage services (emergency response as opposed to
wreck removal) in 2017 was 251. In 2016 there were 306 operations – but that was
the highest number for nearly 20 years.
The statistics provide the only published measure of the state of the marine salvage
industry. The statistics are collected confidentially from all ISU members, aggregated
and analysed by a third party. They do not include the revenues of non-ISU
members. The statistics are for income received in the relevant year but that can
include revenue from services provided in previous years. The statistics are for gross
revenues from which all of the salvors' costs must be met.
Revenue from Lloyd's Open Form (LOF) cases in 2017 was US$ 54 million which is
the lowest since 1999 and continues the downward trend of LOF. Revenue from
SCOPIC was US$ 20 million – down from some US$ 60 million the previous year
and the lowest annual SCOPIC revenue since SCOPIC was introduced in 1999.
The number of LOF cases that realised revenue in 2017 for ISU members was 46 -
an increase on the 34 cases in 2016. However, with the increase in cases and
decrease in LOF revenues it means the average revenue from each LOF case,
including SCOPIC revenue, has fallen and was US$ 1.6 million, down from US$ 3.9
million the previous year.
The total of LOF salved values was nearly US$ 1 billion and the average LOF salved
value was US$ 21 million. It means that the average income (excluding SCOPIC
payments) for each LOF case - both settlements and arbitrators' awards - was 5.6%
of the salved value, the lowest on record.
Revenue from LOF cases represented 31% of all "dry" salvage revenue and LOF
cases accounted for 18% of all "dry" salvage cases in 2017. Ten years ago, LOF
revenue represented more than 70% of "dry" salvage income and 34% of cases.
Both numbers confirm the continuing decline in the financial significance of LOF over
the past few years.
At the same time, revenue in 2017 from operations conducted under contracts other
than LOF was US$ 119 million – up from US$ 75 million the previous year. Average
revenue from non-LOF contracts was therefore US$ 580,000 per case. It reflects the
continuing trend for commercial contracts to be used in place of LOF.
Wreck removal income has grown during the past decade and remains an important
source of income for members of the ISU. In 2017, 120 operations produced income
of US$ 264 million – 58% of total income. It is an increase from US$ 172 million in
Commenting of the statistics, ISU President, Ms Charo Coll, said: "The 2017 ISU
statistics again show the variability of our industry. Yes, the total revenue of US$ 456
million was an increase on the previous year but that is still far from the US$ 717 of
two years ago - more than 30% down.
"Nevertheless the industry continues to be active, continues to invest and continues
to be effective in helping to mitigate loss for ship owners and insurers but, at the
same time, ISU members are also experiencing financial hardship.
"The forces of competition may be making salvors undertake cases for lower returns
and there may be pressure from owners and insurers to drive down costs. LOF
revenue is much reduced and a contributing factor could be the increased use of
"side agreements". It is ISU's understanding that these are used to reduce LOF
awards and settlements.
"It is vital for world trade that there is a well resourced and capable marine salvage
industry available to save life, protect the environment and save property and we
encourage the shipping industry to support its professional salvage providers."