The latest rise of natural gas prices, which in turn has highly affected the wholesale prices of electricity, may be the reason of a change of mind-set and approach when considering ship repair applications.

Having approached and discussed with numerous repair workshops in the industry worldwide, it is understood that electricity costs for their businesses have risen up to more than 4 times since Q4 of 2020.

In turn, this rise in the price of energy has affected how workshops quote for repairs involving high electricity consumption equipment, such as machining, extensive welding, laser cladding, manufacturing of damaged parts etc.

More specifically, during discussion with the representative of a local workshop in Piraeus, it was mentioned that quotations provided to ship Owners one month prior, are now considered obsolete, as the balance of income / expense for the same job becomes negative for their business.

Figure 1: Average price in EUR/MWh – Source: Statista

Evidently, the cost of repairs, ranging from steel works to machinery repairs, is expected to be on the rise, and possibly remain on the high side, always dependent on the cost of electricity per specific business / country, and how each of them offset rising costs.

Moreover, the current crisis caused by the war in Ukraine, has caused major destabilization, and will continue to do as long as it is maintained, as sanctions applied by western powers may eventually increase global energy prices, and prolong the current high costs of electricity.

As we have entered a highly unstable period, many factors play key roles in the future of the ship repair industry, from current supply chain shortages to increasing cost of energy. Thus, the rise in repair costs will undoubtedly be a common phenomenon as we sail through 2022, totally dependent on global developments, the duration of the war in Ukraine, rise of energy costs and how governments react to such issues.

In this respect, a more thorough assessment of options must be made by Owners on future repairs/casualties, as there might be more than one occasion where the option to renew parts ex stock may prove more cost effective than repairing same at workshops (always subject to location, time requirements and specific circumstances).