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Ship Conversion

What is ship conversion?

Ship conversion may be defined as the work carried out on an existing ship so that
the vessel can perform one or more additional or new functions or to enhance her
existing performance after the conversion. Such work can be carried out in a
shipbuilding yard or shiprepair yard. It usually involves substantial amount of work
and therefore requires some time of stay in the conversion yard.

Types of ship conversion

Generally, ship conversions can be grouped into the following categories:

i. Change of a ship's function

The primary function of the ship is changed after the conversion. Some
recent typical examples of conversions of this nature are from:

- general cargo carrier, vehicle carrier to a livestock carrier

- general cargo to cement carrier, container carrier
- oil tanker to floating production, storage and offloading vessel (FPSO)
- oil tanker to floating storage and offloading vessel (FSO)
- product tanker to chemical carrier
- tanker to shuttle tanker
- fishing vessel to geophysical survey vessel
- bulk carrier to chemical carrier, coal tar pitch carrier,
- offshore supply vessel to diving support vessel, well stimulation vessel
- reefer to livestock carrier, container
- cruise ship to ferry
- drillship to cable layer

ii) Increase in deadweight of a ship

Jumboisation is the term commonly used when an existing ship's main

dimensions undergo changes eith6r individually or in combination to produce
the desired increase in deadweight,
i.e. lengthening
increasing the breadth (widening)
increasing the depth of the ship.

Heightening between deck space (by adding accommodation)

The need for the jumboisation of ships arose first in the 1960s as larger ships
especially tankers are in demand.

An interesting example of such conversion was the lengthening of the 442,000 dwt
"Sea Wise Giant" in 1981 to make her the largest tanker in the world having a
deadweight capacity of 564,000 tons.

An example of increasing the breadth is the additional fitting of pontoons on the side
of livestock carrier (converted from a cargo liner) to increase the quantity of pens on
and above main deck.

Numerous car ferries have increased their depth by adding car decks to increase
the car capacity.

iii. Change in the Main Propulsion Unit (Re-engining)

Conversions of this nature are mainly to counteract increases, in the fuel

costs or more stringent environmental regulations. This could involve one of
the following:
a. from steam turbine to diesel engine
b. from low speed diesel to medium speed diesel propulsion
c. from gas turbine to medium speed diesel propulsion
d. from steam turbine to diesel-electric propulsion

iv) Increasing the sophistication of the vessel

Some examples of such conversion are:

a. Conversion of cargo handling and access system
b. Modernisation of ship's navigational and machinery controls
c. Refurbishment of living quarters
d. Adding a new bow thruster or stern thruster
e. Adding stem propeller duct
f. Adding helideck

v) Ship's life extension

An increasing number of tankers, particularly VLCCs built in the early and

around mid 70s, have been sent to the yards for a major overhaul. Though
they were built for an economic life of 15 to 20 years, high new building prices
have forced shipowners to extend their employment further.

C classification societies have drawn up schemes and guidelines for owners

interested in enhancing the condition of their ageing vessels. The renovated
hull may then be considered to have a condition equivalent to that of a ship,
which has just undergone either its first or its second special survey.

The conversion works include hull renovation, seawater piping, cargo

handling system and modifications to meet current statutory requirements.

Reasons for Ship Conversions

i. When the costs of newbuildings are high, and the returns are not justifiable,
ship conversion becomes a viable option for shipowners to acquire the
required tonnage to start up operation. This would be especially so if second-
hand vessels could be purchased at a reasonable cost.

ii. Conversion may be carried out within 2 to 6 months. Delivery time for
newbuildings generally vary from 12 to 18 months and may be even longer
when shipyards are filled with orders. This lead time may be too long for
certain projects that require a fast start-up. This could be overcome by
resorting to ship conversions if the returns are justifiable.

iii. The change in the global economic and trading patterns may render some
vessel types to be either obsolete or idle as in a prolonged oversupply
situation. Shipowners who are faced with such obsolete or idle vessels have
therefore to decide on an option, which could still recover some of their
sunken capital costs. If the opportunity permits, the vessels may be converted
to perform another function.

iv. The rapid changes in ship design, technology and operational requirement
may render existing vessels to be less efficient and less competitive as
against newbuildings. To increase the efficiency and competitiveness of the
existing vessels, some modifications to the vessel are required. For example,
some owners may carry out modernisation of the ship navigational and
machinery controls, modernisation of cargo handling and access system on
board vessels etc.

v. Safety and environmental protection are two major concerns of the

international maritime body IMO. From time to time, new requirements on
standards of safety and environmental protection may be introduced. e.g.
installation of Inert Gas System (IGS), Crude Oil Washing System (COW),
segregated ballast tanks for tankers etc in the 1980s. Onboard facilities may
be upgraded to meet new standards of safety or passenger comfort. Vessels
that are affected may be required to be modified to meet new requirements
either through legislation or through requirements imposed by charterers.

vi. The fulfillment of contract where the owner has made with the charter party
for a relatively short contract of employment may not economically justify
newbuilding. It would be viable for owner to charter and convert a vessel for
meeting the contract requirement. An example was the conversion of tankers
to FSOs to serve a marginal offshore oil field.

vii. In times of war, merchant vessels may be mobilised to support the

deployment of warships. For example, in the 1982 Falklands war fought
between Great Britain and Argentina, numerous merchant vessels were
mobilised to support the sea offensive of the British Navy against Argentina.
Such merchant vessels were required to undergo some modifications to
different extent to suit the new role assigned.

Considerations and implications of ship conversions

Shipowner's considerations

a. Economic justification for conversion

It is important that the owner should earn a reasonable return for investing into the
conversion. The return should justify the purchase of the vessel, the design work,
conversion work and subsequent operation expenses.

b. Technical and design considerations

Not all vessels are suitable for the intended conversion. Many efforts are usually put
in to source out the most suitable vessel and subsequent carry out design work
before a conversion can take place.

c. Operational considerations
Operation of the vessel after the conversion by competent crew must be made
available. This may involve hiring of staff from other discipline, employing supporting
offshore and onshore services.

d. Classification society and statutory bodies’ requirements

While sourcing the vessel to be converted, owners should looked into how the
converted vessel can meet the required regulations. This includes strength
consideration, fire-fighting, safety, pollution and statutory requirements.

e. Time factor
When tenders from different shipyards are received for evaluation, it is important
that the time to be taken for the conversion must meet the schedule of employment.
Owners may recourse to penalty or even termination of conversion contract if the
delivery schedule is not meet. Owners should therefore consider yards with good
track records in ensuring that the delivery is on time.

f. Availability of conversion expertise

Should in-house design team lacks the expertise in conversion design, owners can
employ consultants. Expert knowledge from the conversion yard can also be made
use if available. It is therefore desirable to convert the vessel in a yard where such
expertise is available.

g. Sources of finance
This may come from the reserves of the owner, otherwise it may be in the form of
joint venture capital funds, bank borrowing or financing from the conversion yard. It
is important for the owner to maintain scheduled payment to the conversion yard
equipment vendors in order that work may not be disrupted.

h. Project management and control

Owner may have their own project team or they may hire consultants, or a
combination of both to manage the project in order to meet the schedules and work
with the budget allocated for. Without a proper project team working closely with the
conversion yard, delivery time and conversion cost may overrun.

Shipyard's considerations

a. Objectives for undertaking the conversion

The shipyard who intend to undertake a conversion project which is usually
complicated compared to shiprepair and building may have varied objectives. Some
of these are:
- developing their expertise in conversion
- establishing track records
- capturing market share
- targeting for subsequent post-conversion work from owners
- maintaining a base load of the yard
- meeting the budgeted revenue for the period
- meeting the projected profits, etc .

b. Availability of resources and expertise

Conversion may require additional yard facilities and manpower and these are
normally limited. Although some work may be sub-contracted and equipment may
hired into the yard, the shipyard must still carry out the conversion project without
loosing money. In the tendering stage, the limited resource must be considered. The
type of experience of yard's personnel in carrying out the conversion work must be
also considered.

c. Technical specifications and requirements

The yard which wishes to undertake the conversion work must study the technical
specifications and requirements carefully. Some of the work involves may require
special equipment, procedures, processes and skills to carry out. It is important that
at the tendering stage, these are considered.

d. Time factor considerations

A conversion project is usually carried out within a tight schedule. Sufficient labour
and equipment must be made available. The yard must be aware that during the
time of conversion work, other normal building and repair work are also going on.
Resources to these should not be diluted.

e. Project management and control

At the tendering stage, it is important for the shipyard to consider the tentative
project team with the pre-requisite expertise to carry out the project smoothly.