Analysts: The hidden explanation for the supply sector crisis

Norwegian supply carriers have not booked sufficient depreciations on their vessels over the years, and this is likely one of the main reasons why the industry is in such a poor state, according to analysts cited by Dagens Næringsliv.

Photo: Havila

Norwegian supply carriers have not done their accounting according to the manner used by other types of companies, and their book keeping customs could be the explanation as to why the supply carriers in offshore find themselves in such a mess, reports Norwegian business daily Dagens Næringsliv after speaking with a committee from the Norwegian Society of Financial Analysts for economic information on the topic.

Usually, carriers impair the values of their vessels to account for depreciation throughout the whole time that the carrier expects to own vessels, for example 15-20 years. The majority of the supply carriers have not done this, while at the same time, they have taken it for granted that the vessels could be sold at a good price.

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