Supply & Demand Dynamics
The demand for AHTS's, and offshore service vessels (OSV's) in general continues to be driven by the world's increased energy demands. According to BP Energy Outlook energy demands will continue to grow at a pace of about 1.2% per annum until 2040 with oil and gas remaining the dominant source (circa 55%).
The AHTS market is highly cyclical. Utilization and rates are quick to react to oil price due to the influence oil price plays on oil company investment. With the primary function of AHTS's being the transport of mobile drilling units (jack-up, semi-submersibles) the utilization (and rates) of AHTS's are closely related to offshore rig count.
With rig count down and the market severely oversupplied competition remains fierce amongst AHTS owners.
As of Q2 2020, AHTS demand remains restricted especially following the events of the OPEC price war and the global pandemic. Using rig count as an indicator of demand all regions with the exception of Asia-Pacific have seen a large drop in offshore rig count. This has a direct impact on the number of AHTS's required to support operations driving both utilization and rates down. The multi functional role AHTS's can play (tow, anchor handling, and supply duties) means they are the first to be re-hired when drilling activity resumes as company's try to remain lean and maximize the utilization of the fleet.
Although there has been a slowdown in newbuilds (which is unlikely to increase given the current market outlook and low margins on existing assets) and no new capital entering the market, market oversupply remains the dominant force. With circa 3,500 available OSV's, of which circa 1,700 are AHTS's, and roughly 250 offshore rigs in service as of July 2020 this implies a 14:1 ratio of OSV's to rigs and a 7:1 ration AHTS's to rigs . With a peak ratio of circa 5:1 back in 2013 (for all OSV's) the supply glut from multiple years of aggressive new-build programs will continue to depress rates for the foreseeable future.