Verified Suppliers
Category Description 
Category Description
Platform Supply Vessels, also known as PSV’s or supply vessels, specialize in the logistical support of the offshore oil field. Working between an onshore supply base and offshore work locations supply vessels transport essential consumables in tanks under deck (for instance drilling fluids, cement, fuel and water) and other supplies (such casing, spare parts, food and provision) on its deck.
Supply vessels can be summarized into 3 broad groups; small, medium or large, calculated based upon deadweight (i.e. their cargo carrying capacity) or cleardeck area (i.e. the space available to place cargo on deck).
Supply & Demand Dynamics 
Supply & Demand Dynamics
The demand for PSV'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 Platform Supply Vessel 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. As of mid-2020 oil prices have not reached levels to tighten a market that has become severely oversupplied through the high oil price years. Competition between supply vessel owners remains high and day rates low.
Demand Outlook
As of Q2 2020, supply vessel 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 locations with the exception of Asia-Pacific have seen a large drop in offshore rig count. This has a direct impact on the number of supply vessels required to support operations driving both utilization and rates down.
Supply Outlook
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 and roughly 250 offshore rigs in service as of July 2020 this implies a 14:1 ratio of OSV's to rigs. With a peak ratio of 4.5:1 back in 2013 the supply glut from multiple years of aggressive new-build programs will continue to depress rates for the foreseeable future.
Key Players
Key Players
Portfolio Positioning 
Portfolio Positioning
It is typical to see spend within the Platform Supply Vessel category sit in the “Leverage” quadrant of the Kraljic Matrix (low supply risk, high value).
At present buyers are in a strong position with low demand, high competition between owners, and relative ease in switching out vessels.
Cost & Price Analysis 
Cost & Price Analysis
Price Analysis
Current Platform Supply Vessel rates face downward pressure. The table below provides some rough guidance on pricing.
Supply vessel owners have had a difficult past 5 years many of them going through chapter 11 and failing to turn a profit during this period.
Cost Analysis
The main cost components associated with platform supply vessels are the operating costs (crewing, provision, maintenance, insurance and radios) that can represent up to 70%. Other significant cost components are depreciation, overheads and interest expense. Given the current market conditions theses cost components will vary significnatly depending on impairments and the company's ability to restructure its debt.
Total Cost of Ownership 
Total Cost of Ownership
Parameter | Service Cost | Fuel Cost | Performance Cost |
Cost Visibility | High | Medium | Medium |
Description | The rates and charges agreed in a contract for the performance of the service | The cost of fuel used by the vessel in performance of duties | The cost of inefficiency in performing duties |
Cost Driver |
|
|
|
Commercial Impact | High | Medium | High |
Strategy
Strategy
Given the current market conditions any strategy should be focused on increasing competition and maintaining flexibility in the market. Below are a few options to consider:
- Refine Specifications and Crewing - Ensure vessels and crew are fit for purpose. With demand low and a glut of supply the market presents an opportunity to charter younger, more fuel efficient, and safer vessel at very competitive rates. That being said try to be as generic as possible to ensure maximum competition.
- Maintain Flexibility - The most competitive prices will be achieved through short to mid-term charter durations (6 months to 18 months) with Owners reluctant to lock in low for long. Always retain flexibility to exit the charter on short notice (no more than 90 days).
- Competitive Tender - Aggregate requirements and tender any supply vessel competitively. The supply vessel market, to an extent, has become more like a commodity in recent years with all owners offering similar vessels. Competitive tenders, firm negotiations and even reverse auctions will yield the best pricing.
- Contract Selection - Time charters are the preferred choice of contract in the oil and gas supply vessel market. Below is a table of the contracting options available for consideration. Be clear on who is responsible to pay for what (e.g lube oil).
Parameter | Time | Voyage | Bareboat |
Description | Per day or duration of time | Per trip/voyage | Vessel hull & machinery only |
Operational Preference | Preferred | Not preferred | Not preferred |
Vessel Owner Responsibility | Vessel Crewing Maintenance Insurance |
Vessel Crewing Maintenance Insurance Port Charges Bunkers |
Vessel only |
Charterer Responsibility | Port Charges Cargo Loading & Discharge Bunkers |
Cargo Loading & Discharge | Crewing Maintenance Insurance Port Charges Cargo Loading & Discharge Bunkers |
Calculation of Charges | Daily hire rate | Lump sum per voyage or based on cargo volumes | Monthly lump-sum payment |
Standard Form Contracts (BIMCO) | SUPPLYTIME | GENCON | BARECON |
Technical Insights
Technical Insights
Dynamic Positioning Explained
Hybrid Propulsion Explained