Titan And Svitzer Begin Negotiations Towards Creating Global Salvage Leader

By Finance

Crowley Maritime Group’s US-based division of Titan Salvage has initiated talks with Svitzer Salvage (property of AP-Moller Maersk) regarding a potential merger of their respective salvage-related operations.

This move could quite likely result in the creation of a market leader given the worldwide network of tugs and emergency response experts of Svitzer Salvage and Titan’s thorough experience in the field of wreck-removal.

Titan was accounted as the leading salvor regarding the Costa Concordia wreck-removal contract on Giglio Island, Italy. The operation in question is widely acknowledged as being the most complicated as well as expensive of its kind ever to be carried out.

As of the moment the situation remains unclear on whether or not the two companies are going to undergo a complete merger process or simply form an alliance.

Both Titan and Svitzer Salvage officials have declined to comment the recent speculations regarding the deal.

Peter Pietka, chief executive of Svitzer Salvage has elaborated on the manner by saying that there are a lot of market rumors currently regarding any possible strategy scenarios related to the salvage companies’ course of action to handle the problems of the industry, including the issue revolving around the rapid reduction of various aspects of emergency response work.

The discussions have emerged among a troublesome market field regarding salvors. Lloyd’s Open Form (LOF) contracts and incidents are demonstrating a significant reduction and salvors have issued complaints that awards are not sufficient for investing in equipment and for the maintaining of the current services.

LOF contracts as well as awards are in decline when regarding them as a percentage of salved value, as made evident by data from Lloyd’s insurance market.
Svitzer Salvage is the oldest salvage company in the world and has the biggest global network with its 125 specialists, all of which in 40 different countries.
The company has roughly 500 tugs at its disposal due to its wider towing and harbor operations.

Robert Uggla, chief executive of Svitzer Group has been appointed to improve the company’s profit levels, while at the same time AP Moller-Maersk leans towards the disposal of non-core assets.

Earlier this month, Pietka came out with a strategy that focused on the development into wreck removal operations along with offshore decommissioning.
According to Svitzer Salvage data, the company has a 30% share regarding the market for emergency responses but its wreck-removal work remains a bit limited. The company’s most notable job as of recently has been the removal of the Rena container carrier from rocks off Tauranga, located in New Zealand.
Pietka himself commented that the company is not taking much part in wreck removal operations and only holds a small share of the market but its plan for the foreseeable future is to transform into a wreck removal market leader.

He also predicted a growth level of 10% in the wreck-removal market which is to be mainly the result of environmental regulations.

Titan on the other hand comes into the picture with 70 operations involving wreck-removal procedures, and also brings specialist equipment like the two jack up barges that are the Karlissa A and Karlissa B.

Observers have pointed out the fact that the co-op effort could greatly contribute for the two companies’ developing of an innovative approach regarding Svitzer Salvage’s recent salvage work.

The new-style contract stipulates that the two respective owners have to sign up and commit to its Global Preparedness Programme.

The ship is to be technically evaluated after which a risk profile is to be made, followed by the negotiating of a pre-arranged salvage agreement.

The whole concept revolves around the reducing of risk and the time consuming problem related to potential negotiations in an emergency situation.

The plan, however, calls for the maintaining of a global network of both salvage experts and the necessary equipment features, which is quite a strain for one company alone to handle.

Potential merger talks are bound to worry rivals like industry LOF contract leader in the face of Tsavliris Salvage, Greece-based newcomer Five Ocean Salvage and Netherland-based operator Smit, that managed to acquire Boskalis Group recently.