The demand for Very Small Aperture Terminal (VSAT) services by shipping firms within the GCC and the Mena region is growing at a fast rate with more advanced new building programmes being commissioned.
A senior industry official said that with new technologies being introduced at a much lower cost, the industry is moving away from pay-by-the-minute and pay-by-the-byte narrowband service to broadband facilities, which offer 24-hour connectivity, crucial for the more tech savvy ship crew.
Gunnar Andre Valle, Regional Director for Middle East, India and Africa for Marlink, a global provider of maritime satellite communications, said the broadband facility is crucial for new-generation ships equipped with eco-friendly engines and machinery that need to constantly communicate with onshore monitoring centres.
"We have witnessed a very positive increase in demand for VSAT. The next-generation vessels, particularly those aiming to reduce emissions, are opting for broadband connections. The effort is to save cost, and with fuel-efficient engines being developed, constant connectivity is crucial. Communication cost works out to less than one per cent of the total cost of shipping, whereas fuel contributes to almost 10 per cent," said Valle.
He said within the region the trend now is for shipping companies to shift to VSAT.
"For example, we witnessed this shift in Norway about five to seven years ago, whereas here it is taking off only now. Moreover, we are witnessing a lot more Gulf companies going for next generation, advanced vehicles that can cut emissions. Qataris, for example, have a large ship-building programme with advanced vessels," said Valle.
According to him, the single biggest benefit of VSAT is its cost advantage when compared to the facilities it provides to shipping companies. While on an average it would cost about $5,000 (Dh18,365) to $6,000 for a ship using Immarsat's pay-by-the-minute service, wherein a very limited time of connectivity is provided, shifting to VSAT will enable the shipping crew to connect for a much longer time at about the same cost.
A recent report by Comsy said that VSAT maritime services are expected to grow by more than 400 per cent through 2012.
"At present there are about 20,000 deep-sea vessels in the world. There are more being built at various shipyards," said Valle. Marlink, which provides connectivity to about 2,000 customers and their 8,000 odd vessels, said the demand, both globally and within the region, has been increasing. The Dubai office alone handles about 450 customers.
"We are providing the service for all the six Polarcus vessels that are being built at Dubai Drydocks," said Valle.
The company's revenue, he said, has been growing despite a falling market. "We are increasing our revenue despite the difficult situation. In 2008, we had a growth of about 30 per cent, while in 2009 we still had positive growth, but it dropped to about 15 per cent. So far this year has not been bad and we will most probably end up with the same growth as witnessed in 2009. It is significant given that the shipping industry has been going through a crisis," he added.
Valle said the industry is getting more and more competitive and complex. "As it is getting very capital intensive, we expect the small players to soon disappear from the market," he said.
The Far East, especially China, is doing well. "While many new building contracts are being cancelled, the Chinese are taking up these contracts for about 30 to 40 per cent less cost and getting it built. More and more new orders are coming from such Chinese companies," he said.
Valle said Marlink is currently negotiating with three of the biggest shipping companies in the region.
By Joseph George
© Emirates Business 24/7 2010
