Swire Pacific Offshore sees a challenging market for its core offshore supply vessel business in 2011 as a result of an oversupply of ships and low charter rates.
John Rae-Smith, executive director of Swire's trading and industrial division, said Swire Pacific Offshore was also facing tough competition from other shipowners.
'There is a lot of oversupply,' he said on board the Pacific Champion, an anchor-handling tug supply ship that became the first ship to be christened in Hong Kong by Swire Pacific Offshore. He added this flood of ships was affecting the ability of shipowners to get work at economic rates.
Charter rates for offshore supply vessels like the 16,300-brake horsepower Pacific Champion were around US$9,500 per day at the beginning of this month, according to shipbroker Clarkson. This was slightly higher than the average daily rate for the previous three months of US$7,432, but lower than the daily average for 2010 of US$13,509.
The surge in oil prices caused by unrest in the Middle East may be felt in renewed oil drilling activity towards the end of this year. 'Drilling programmes take six to 12 months to put together,' Rae-Smith said.
His comments were echoed by Swire Pacific chairman Chris Pratt in the group's annual results. 'The offshore market in all regions where Swire Pacific Offshore operates was very challenging. Despite recovery in demand as oil prices and offshore activity increased, charter hire rates and vessel utilisation remained under pressure,' Pratt said.