The OSV market experienced a robust start in 2024, reaching record levels before showing signs of easing in the latter half of the year. Looking ahead, rates are anticipated to continue softening into the first half of 2025. Despite this slowdown, supply-side constraints—such as an aging fleet, restricted shipyard capacity, limited financing, and a shortfall in new vessel deliveries—are expected to maintain tight market conditions, reports Breakwave Advisors.
Further relief remains unlikely in the near term, as most newbuild orders placed in late 2023 and throughout 2024 are not expected to enter commercial operations until 2026 or 2027. Additionally, upcoming projects in Offshore Oil & Gas and Offshore Wind are set to drive demand in the coming years, ensuring vessel utilization remains at satisfactory levels.
North Sea: Diverging Trends for AHTS and PSV Markets
The North Sea spot market displayed mixed dynamics in 2024. Anchor Handling Tug Supply (AHTS) vessels continued to generate strong earnings, benefiting from favorable market conditions that have persisted since last summer. However, Platform Supply Vessels (PSVs) faced a weaker-than-expected performance, with day rates steadily declining throughout the year. This downturn has frustrated investors who had previously banked on the region’s booming market.
A significant factor contributing to the PSV market’s struggles has been the departure of several rigs from the area, either for scrapping or relocation. Reports indicate that the North Sea rig count has declined by over 50% in the past decade, reducing opportunities for PSVs and further pressuring rates.
West Africa: The Most Profitable OSV Region
West Africa continues to be a highly lucrative region for OSV owners. Mid-sized AHTS vessels are securing rates of up to $21,000 per day on the spot market and around $17,000 per day for long-term charters extending up to three years. A key advantage of this market is the absence of age restrictions on OSVs, allowing well-maintained 20-year-old vessels to generate earnings that can exceed double their market value on extended contracts.
Persian Gulf and India: Tightening Margins but Emerging Prospects
The Persian Gulf has historically been a stable market for OSVs, but recent trends indicate a cooling phase. While there are still profitable opportunities, margins are tighter due to higher crew and maintenance costs required to meet the stringent demands of major operators.
Meanwhile, India presents a growing opportunity, with ONGC actively seeking OSVs that can be repositioned from the Persian Gulf. This has created a viable alternative market for vessel owners looking to sustain profitability.
Far East: Declining TC Demand, Limited Project Growth
Despite active sale and purchase (S&P) activity in the Far East, time charter (TC) demand has been tapering off in recent months, now reaching its lowest levels. Just a few months ago, a mid-spec 80-ton bollard pull AHTS could secure around $9,000 per day, whereas current rates have dropped to approximately $6,500–6,800 per day.
The primary reason for this decline is the slowdown in projects requiring such vessels, with limited entry opportunities in China. Instead, most emerging projects are concentrated in Indonesia and Malaysia. Additionally, a growing trend among Singaporean owners has been the disposal of older assets to raise capital for investments in the subsea segment.
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Source: Breakwave Advisors
