LOOMING regulatory requirements are proving a mixed blessing for Finland-based engine manufacturer Wartsila.

The company has reported a surge in demand for scrubbers ahead of the 2020 sulphur cap, but it is also anticipating turbulence courtesy of a consolidation of ballast water treatment system manufacturers.

Wartsila Marine Solutions has received more than 50 orders for scrubbers during the first nine months of 2017, with the majority of those placed in the third quarter. The demand has been mostly for newbuilds, with a lot of activity coming out of Asia, but WMS president Roger Holm also expects retrofits to pick up.

The unprecedented scrubber intake has come as something of a surprise given the widely anticipated reluctance on the part of shipowners to commit to an investment. A recent ExxonMobil survey on vessel operators found only 11% would introduce scrubbers before the cap comes into effect.

The regulations will force vessels to emit fuels with a maximum 0.5% sulphur content, down from the current 3.5% limit, effectively requiring other low sulphur fuel or scrubber installations.

Meanwhile, as the shipping and oil industry mull their options for the sulphur cap, the former must also contend with the Ballast Water Management Convention. Sanctioned by the IMO in the summer, this partial two-year delay means the regulation currently applies only to newbuilds. The existing fleet must comply from September 8, 2019. Wartsila is undergoing tests for approval from the US Coast Guard, which has different requirements from the IMO, on two separate systems: a UV system and an electrochlorination system.

Mr Holm, who expressed relief that ballast systems are only a small part of Wartsila’s business, anticipated consolidation in the system manufacturer side, unequivocally stating that the IMO’s delay will have a direct effect on that market. Oceansaver, a BWM system provider that had secured USCG approval, went bankrupt in September.

The IMO’s decision has already had an effect on Wartsila’s business strategy. Mr Holm said that while the electrochlorination tests will go ahead as planned this year and approval is expected in 2018, plans for the UV tests have changed and some of those will be delayed rather than done in parallel. The company expects approval of its UV system sometime next year as well.

Digital saviour
Wartsila announced on Wednesday that its marine solutions unit suffered a 16% decline in net sales in the 2017 third quarter compared with the same period last year, but also recorded a 35% spike on the value of its order intake.
Mr Holm said the order intake was good in a market that is developing right direction, but is still on fairly low contracting levels when seen in a larger historical context.

Wartsila’s dependency on the global orderbook means it will have to look beyond the manufacturing business to boost earnings. To this end, the company’s focus is being increasingly shifted toward the potential benefits of digital systems and collaborative procedures.

Wartsila chief digital officer Marco Ryan explained the company recently set up its first Digital Acceleration Centre in Helsinki aimed at delivering tailored products to customers through an interactive feedback environment.

The DAC serves a threefold purpose, according to Mr Ryan; to develop business ideas and ways to use and present available data by adopting a startup mentality, to create an agile and co-creative dynamic with the customers and finally to provide a space in which boundaries can be pushed and ideas can be proposed.

“We can triangulate between the customer need, the smart marine strategy and our core competence around the product and engineering mix. And those three things together require an environment sometimes where you want to test and do things and not be afraid to fail. And that is pushing a boundary,” he said.

Once the right solution has been found, the challenge is to rapidly scale that to the specific circumstance. This scaling is what will drive the pace of change, according to Mr Ryan.

Wartsila will launch another DAC in December and two more in 2018.

Wartsila conducted a remote-controlled navigation test in August on Gulfmark’s 4,088 dwt Highland Chieftain offshore supply vessel. Mr Holm said the test was successful but noted it is just one step in demonstrating the company’s capabilities in its quest for operational efficiency.

The belief in increased automation drove Wartsila’s purchase of Guidance Marine earlier in October. The company specialises in sensor technologies, something that will help customers optimise efficiency when it comes to fuel consumption and vessels movements, Mr Holm said.