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International Salvage Union 2014 statistics show the great benefit of the salvage industry

Issued 19th May 2015

The International Salvage Union (ISU) annual statistics for 2014 show a vibrant industry providing vital services to the shipping industry which help protect shipowners and insurers from huge financial losses. For example, in Lloyd’s Open Form (LOF) cases alone, US$1.2 billion of property (ship and cargo) was salved relating to cases where revenue was realised during 2014.

The ISU 2014 annual statistics relate to income which ISU members received in 2014 but which may be due from cases in previous years. Gross revenues from all activity was US$ 775 million, almost exactly the same as the previous year’s figure of US$ 772. There is a notable increase in revenue from sources other than Lloyd’s Open Form work.

At the same time a fall in revenue from wreck removal activity probably reflects the conclusion or winding down during this period of major cases such as the Costa Concordia and Rena.

There has been a significant increase in the number of non-LOF cases boosting the total number of cases recorded to 249, up from 196 in 2013. The overall trend is a clear increase in the number of non-LOF cases and a continuing decline in the number of LOF cases. LOF revenue has correspondingly fallen. It is down from US$202 in 2013 to US$181 in 2014.

Non-LOF revenue for 2014 was US$ 146 up from US$ 62 last time, a significant increase. It reflects a preference by shipowners to use commercial terms other than LOF. It continues to be a concern for ISU which believes that LOF has great benefits in emergency response cases. Importantly LOF revenues include the element of “encouragement” that has been an underlying principle of salvage for centuries. It ensures that it is worthwhile for salvors to maintain a response capability in an uncertain sector where income is not predictable.

LOF revenue as a percentage of salved values fell from 16.34% in 2013 to 15.2% in 2014. This includes cases where the settlement was agreed and those that went to arbitration. Generally, settled cases are more simple and arbitrated cases more complex. The great majority of LOF cases, around 75%, are settled.

Wreck removal revenue has fallen from US$ 458 in 2013 to US$ 394 in 2014 as well-known cases were concluded or winding down. The number of wreck removal cases was up dramatically from 48 to 91. Wreck removal cases also includes other “marine services” such as bunker removal and cargo recovery as well as dealing with wrecked hulls. Despite the fall in wreck removal income in 2014, the trend shows the increasing importance of this work for ISU members.

Commenting on the statistics, ISU President Leendert Muller said: “Gross revenues have remained stable but the way in which our members receive their income has changed. There is a noticeable rise in operations overall but a fall in LOF cases. Correspondingly, income from LOF is in decline while income from commercial contracts is up.

“Nevertheless, LOF salved values are a good indicator of the benefit of our industry. It shows that our members salved US$ 1.2 billion (the combined value of cargo and vessel) worth of property that was in peril at sea. And paying 15% of the total value to save the whole of a marine adventure from potential loss represents good value.

“As with our pollution prevention statistics it helps to verify the importance of the commercial salvage industry and its value to shipowners and insurers.”

The full statistics can be viewed by clicking here.