Disaggregated Supply: Commercially Advantageous or Too Much Hassle?
By Anders Ljung, Lynsey Thomas and Gavin Tully
July 20, 2020
The supply market for subsea cable systems is changing at a rapid pace. Over the past few years, we have seen several changes of company ownership, a vast increase in vessel utilisation and after a long period of stagnation wet plant development is finally picking up speed. In addition, the way that certain customers are procuring systems is being remodeled, alongside amendments to industry standard commercial terms and variations in pricing methodology from the system suppliers.
In a period of purchasing change, this article seeks to review whether turnkey system provision is really the customer’s best friend, or if a disaggregated supply chain model should be considered wherever possible.
What is disaggregation?
Disaggregation means to break into constituent parts; in the case of a submarine cable system these comprise of cable, repeaters or ROPAs, branching units, submarine line terminating equipment and all the other small parts and widgets in between. ‘Services’ are also supplied as part of the construction process and hence marine survey and installation are considered herein.
Historically, how submarine systems have been supplied has gone full circle. Disaggregation occurred in the early consortium systems with the existence of ‘supplier consortia’ providing differing SLTEs, repeaters and cable. There were mid-span meets, and mixed supervisory controlled different parts of the subsea system. The development of the Universal Joint helped to ‘open up’ cable supply and in recent times the move from the simple coupler to gateways and portals either side of the wet plant has led to a subsea Open System revolution.
The alternative approach is to procure an entire subsea system from one just one vendor, including wet and dry products and services. Certain customers prefer this method as it keeps accountability with one party and in theory gives confidence that when the switch is flicked the lights will come on. One of the main draw backs of turnkey supply is that it doesn’t necessary lead to a ‘best in class’ solution for all parts of the system. A supplier may have fantastic cable but an inferior amplifier solution, a strong fleet but no space in the manufacturing schedule, etc. And well documented are the drawbacks of procuring transmission equipment at the contract forming stage, where in effect you are buying something that could be out of date, from a technology and cost perspective, by the time it is installed.