June 3, 2016
Marine Harvest, Deep Sea Supply to set up aquaculture shipping joint venture
Marine Harvest and Deep Sea Supply PLC have entered into an agreement to establish a 50/50 owned aquaculture shipping joint venture involving the building, owning and operating of aquaculture vessels.
Both companies believe there is significant room for efficiency improvements across the value chain in aquaculture shipping, ranging from reduction in newbuilding cost to more cost-efficient operations.
Accordingly, Marine Harvest aims to significantly reduce costs related to vessel services through establishing the joint venture. Over the past few years, aquaculture vessels have increasingly become an integrated part of the value chain.
Marine Harvest currently charters 44 vessels with a combined cost of approximately EUR100 million (US$112.1 million) per year, making the company the industry's largest charterer of such vessels.
The joint venture expects to enter into contracts for the construction of aquaculture vessels which will be chartered by Marine Harvest upon delivery.
Current discussions indicate a substantial reduction in newbuilding cost compared to solutions provided by alternative aquaculture providers. The joint venture entity will be Marine Harvest's preferred provider of aquaculture vessels. The intention of the partnership is to also compete for external contracts.
Deep Sea Supply is a leading owner and operator of supply vessels and has a proven track record of building and operating vessels in a cost efficient way. The joint venture will enter into management agreements with Deep Sea Supply covering all necessary management services for the partnership, including technical management, ship management and other corporate services.
Deep Sea Supply has the operational platform in place required by the joint venture to meet its strategy of safe and efficient operations of aquaculture vessels.
According to Marine Harvest, the aquaculture shipping industry is fragmented and characterised by lack of competition.
Through the joint venture, Marine Harvest and Deep Sea Supply aim to consolidate the industry to achieve economies of scale.
Marine Harvest seeks every opportunity to streamline production and reduce cost, and as such the joint venture is expected to yield operational efficiency gains and challenge the existing cost dynamics in the aquaculture shipping industry.
The joint venture will explore any opportunity that may improve building cost or operating cost, including taking advantage of the current imbalance in the offshore service vessel market through potentially converting surplus offshore vessels into aquaculture vessels if project economics are favourable.
- Marine Harvest