LOF revenue at historic low
ISU today published its annual statistics for 2019:
• Gross revenue for ISU members – US$ 482 million (2018, US$ 409 million)
• Activity levels – 216 services (2018, 234 services)
• Lloyd’s Open Form at very low levels – 35 cases (2018, 55) and LOF revenue at historic low of US$ 49 million (2018, US$ 104 million)
• Wreck removal income – US$ 284 million from 101 services (2018 – US$ 208 million from 71 services)
Commenting of the statistics, ISU President, Richard Janssen, said: “The 2019 ISU statistics are broadly comparable with the previous year. Gross income has rallied somewhat but the numbers are still well below the levels of several years ago when annual income was typically more than US$ 700 million, driven by large scale wreck removals. It shows the economic pressures on our industry but our members have confidence that they provide critical services for shipowners and insurers – protecting the environment, reducing risk, mitigating loss and keeping trade moving. They are however concerned about the sustainability of their businesses and the model on which their services are historically being compensated.
“The market conditions have caused contraction of the industry which has sadly lost some famous names in the past few years. It is essential that there remains global provision of a professional salvage capability so that owners, insurers and wider society can have confidence that marine casualties will be safely and cleanly managed by contractors with the right skills, experience, people and equipment.”
The 2019 ISU statistics show that there were 35 Lloyd’s Open Form (LOF) cases for ISU members generating income of US$ 49 million. It compares with 55 cases worth US$ 104 million in 2018. Average income from each LOF case in 2019 was US$ 1.4 million representing 10% of the average LOF salved value.
Revenue from LOF cases represented 27% of all “dry” salvage (emergency response) revenue and LOF cases accounted for 16% of all “dry” salvage cases in 2019.
SCOPIC revenue at US$ 17 million was the lowest since 2001.
Revenue in 2019 from operations conducted under contracts other than LOF (commercial terms) was US$ 131 million – up from US$ 75 million the previous year. Average revenue from non-LOF contracts was therefore US$ 723,000 per case.
Wreck removal income is a major source of income for members of the ISU. In 2019, 101 operations were reported with a gross income of US$ 284 million – 59% of total income.
The ISU statistics are collected from all ISU members by a professional third party, which aggregates and analyses them. The statistics do not include the revenues of non-ISU members but are the only formal measure of the state of the marine salvage industry. The statistics are for income received in the relevant year but that can include revenue relating to services provided in previous years and therefore there is an element of “lag”. The statistics are for gross revenues from which all of the salvors’ costs must be met.