Spring 2019 Newsletter

By: Marcon Staff

Marcon's View of the Tug Market

Spring 2019 Newsletter.pdf
Spring 2019 Article.pdf

Marcon has sold three tugs totaling 12,700BHP as of end first quarter 2019, after selling or fixing tows for 22 tugs totaling 77,280BHP in 2018. In 2017, we sold or chartered four tugs totaling 17,750HP. One 5,000+ HP ASD tug continues to be fixed on previously arranged long-term charter in Latin America. Since 1981, Marcon sold or chartered 351 tugs totaling 1,113,387BHP. Several more sales are expected to conclude soon.

Keeping track of the overall numbers has always been key to Marcon’s success. Of the 13,424 vessels and 3,691 barges we currently track, 5,038 are tugs with 547 officially on the market for sale worldwide, down 38 or 6.50% from one year ago, February 2018, and down 140 or 20.38% from February 2014. 54.48% of foreign and 98.51% of U.S. tugboats for sale are direct from Owners. 186 or 34.00% of the tugs worldwide, primarily foreign flagged, were built within the last 10 years, are newbuilding re-sales or currently under construction – compared to 31.11% one year ago and 31.30% five years ago. 64 (11.70%) are over 50 years of age. Eight have no age listed. The oldest tug Marcon currently has listed was built in 1907 and was originally built to tow coal barges and provide fuel for the Reading Railroad. This “old lady” is balanced by 13 newbuildings between 265BHP and 5,200BHP scheduled for delivery in 2019. Six newbuildings are azimuthing, with five traditional twin screw and two small single screw tugs.

The majority of tugs Marcon tracks for sale as of this report are in the US with 135 tugs officially on the market (159 one year ago), followed by 96 in Southeast Asia (125), 67 in the Mediterranean (45), Mid-East with 64 (57), 48 in Europe (51), 40 each in the Far East (49) and Latin America (33), 21 in the Caribbean (18), 11 each in Africa (16) and in the South Pacific (13), 6 where location unstated (7), 5 in Southwest Asia (2) and 3 in Canada (10). CAT diesels still power most tugs we have for sale with machinery in 158 or 29% of the tugs listed. This is followed by 70 vessels with EMDs, 60 Cummins, 46 Yanmar, 37 Niigata, 20 Mitsubishi and 19 each GM/DD and Wartsila powered tugs. 118 tugs are powered by machinery from other manufacturers from Akasaka to Volvo with two Fairbanks Morse boats still on the market.

Five years ago, 31.30% of tugs for sale worldwide, primarily foreign flag, were built within the previous 10 years compared to 29.98% today. Five years ago, 9.02% of the tugs on the market were 50+ years old compared to 12.98% today. The average age of all tugs we have for sale worldwide decreased slightly from 26 to 25 years (1994 build dates now vs 1988 in 2014). Southeast Asia then had the largest selection of tugs listed with 148 available (21.5%) tracked by Marcon. This was followed by 112 in the US (16.3%), 105 in Europe (15.3%), Mediterranean 83 (12.1%), 72 (10.5%) in the Far East, Mid-East 45 (6.6%) and Caribbean 25 (3.6%).

Looking at tugs for sale worldwide, conventional twin screw tugs still prevail with 341 (62.3%) available. These are followed by 121 azimuthing (22.1% - and growing), 67 single-screw (12.2% - and shrinking), ten triple screw (1.8%) and eight Voith Schneider tractors (1.5% - never a high percentage). As a comparison and demonstrating the trend in propulsion, five years ago 22.0% of the 687 tugs for sale were single screw, 58.2% twin screw, 16.4% azimuthing and 0.4% VS tractor tugs. More ASD tugs are being listed today worldwide than single screw tugs as ASDs become more common worldwide. It is difficult to get a precise figure handle of tugs, mostly older single and twin screw, being scrapped, but Sea-Web reports 1,497 tugs worldwide broken up or to be broken up. This is up 9.49% from August 2018’s 1,365, when we started tracking this figure. 140 fewer tugs are officially for sale than five years ago in February 2014. Most of the decline in listings were lower horsepower boats. 200 fewer tugs are today listed under 3,000HP. The 5–6,000HP range gained 20 tugs while their average age decreased from 23 to 18 years. 4-5,000HP tugs for sale increased by 15 boats from five years ago, while their average age remained at 17 years. Fourteen more tugs are also available in the 3-4,000HP range (average age 24 years) and there are six more in the 6-7,000HP range (average age 19 years). The few higher horsepower tugs we have listed are generally older conventional boats with average age 28 (1991) versus 19 years (1995) five years ago - basically some of the same boats, but only older.

Marcon ended first quarter 2019 with seven sales completed, following 41 sales in 2018, which was a significant increase over 2016 and 2017, which saw 35 sales and charters combined. The increase in sales has mostly been due to owners clearing under-utilized or laid up vessels out of their fleets. Marcon sold three tugs so far this year with averaging 31 years old and at an average of $904.22/BHP, but as the year goes on we expect price/BHP to fall. Two tugs abt. 21 years old sold for region $1,400 - $1,500/BHP, and the other was 41 years old and being “right boat, right place, right time” sold for $347.44/BHP. All three tugs were sold within the US. Eighteen tugs were sold in 2018 for average $84.39/BHP with averaging 37 years old. Two 18 year old tugs sold for $294.44/BHP each and a 20 year old tug sold for $675.00/BHP, while 13 of the tugs were 36 - 55 years old with selling prices $23.26 - $90.91/BHP. As of end of February, Marcon’s Sales-to-Asking-Price ratio was 86.32%, higher than 2018’s 77.79% and 2017’s 81.49%. Marcon’s 2019 sales to date have been within the US with one US to foreign sale into Canada. In 2018, 75.7% of our sales were within the U.S., 20.27% were sold out of the U.S. and 4.02% were sold foreign to foreign, mostly into Canada, the Caribbean, Latin America and the South Pacific.

Full report is available here: Tug Market Report Feb 2019.pdf