Idwal Marine fills vessels inspection gap for buyers
Graig Group subsidiary’s ‘easy access’ platform allows banks and buyers of secondhand ships to factor in condition and what money needs to be spent on maintenance in the coming years
Ship inspections are usually associated with safety, but amid tighter financial regulation and concerns over poor maintenance in depressed markets there is a growing market for inspections linked to valuation.
Today, online valuations are available at the click of a mouse but, while offering a guide to price, they can reveal little in terms of informing potential buyers of the condition of the ship and what money needs to be spent on it in the coming years.
At the same time, shock financial constraints on bank’s capital adequacy requirements, put in place after Lehman Brothers collapsed, are also prompting lenders to obtain a clearer and more accurate assessment of the value of ships on their lending portfolio.
These two factors played an important part in the decision of technical company Idwal Marine to expand into the online service InspectMyShip, which was set up to provide easy access to booking ship inspections and providing reports in a digital format.
Idwal is a part of the Cardiff-based technical, shipmanagement and consultancy Graig Group and is named after Idwal Williams, who founded the Welsh shipping company back in the 1890s.
Idwal director Nick Owens says the thinking behind the new service is an increased understanding of the role a ship’s condition plays in its value.
“Why would you not factor in a ship’s condition if it had an impact on value,” he said. “It was an obvious market opportunity as there was an increase in the need and appetite from the banking sector to look at assets on the balance sheet.”
While Idwal’s reports are often used for the purposes of valuation, the company is not in the business of placing a price on ships.
“It is important to stress we steer away from making valuations; we are a technical consultancy full stop,” said Owens.
Meeting new regulations
Potential buyers need to see where individual ships stand amid a raft of incoming environmental and welfare regulations that require investment in vessels.
Poor trading markets are also usually a sure sign of cutbacks in ship maintenance and there is a wider general concern over declining quality standards in shipping.
That raised potential reputational issues for lenders, another factor in increasing the demand for inspection. Owens said: “These days it is not difficult to trace a ship back to its lender.”
It is not only lenders. With all the shipping markets in the doldrums and littered with distressed assets, opportunistic investors have a keen eye out for bargains and need quick inspection services to make sure what they are buying is up to scratch.
Owens points out it is often cheaper and quicker for Idwal’s global network to get an inspector to a ship rather than an owner to send out his in-house surveyor.
Then there is a wider growth in inspection demand from sale and purchase shipbrokers for pre-purchase surveys and charterers for pre-charter inspections. Even protection-and-indemnity clubs have joined the list of clients.
The growth of Idwal has, to some extent, helped the Graig Group make up for a downturn in its more mainstream work.
Graig has previously been most active in ship construction supervision, shipmanagement and joint-venture newbuilding investment projects — something that has fallen away with the downturn in the newbuilding market. Its business model combines technical, project and finance expertise to manage joint-venture newbuildings, chiefly in China, often for technically advanced ship designs.
Graig chief executive Hugh Williams says the company has had to innovate to make up for the fall in business.
“Graig Group is a broad-based shipowning and operating group providing newbuilding supervision and ship finance to global clients,” he said. “The culture is to be innovative and partnership-minded and the launch of InspectMyShip is part of that culture.”
The main part of the business remains strong, Williams insists, although he is reluctant to disclose the projects he has up his sleeve.
“We have a strong and secure business with financial support from investors and we see a range of opportunities from that.
“We have been affected by the global downturn but we have been active in managing that,” he said.
Owens points out there is scope for further development, with the new digital format of the inspection reports allowing data to be combined with other streams.
While the newbuilding market remains in slumber, technical services are still in high demand.
Williams said: “Idwal Marine is the fastest expanding area of the group. Demand for technical risk management is clearly there and we are responding in an intelligent way globally.”