← Business Models: Industry Specific (Infrastructure, Transport & Utilities) (all topics)
Capital vs maintenance dredging
What it is
Capital dredging deepens or widens a channel or basin for the first time, creating new capacity; maintenance dredging removes accumulated silt to preserve an existing depth. Capital work is project-based and lumpy, maintenance is recurring and contracted
Siltation rates determine how much maintenance a port needs each year
Impact on industries
- Maintenance dredging is an annuity - siltation is continuous and the work must be done regardless of port profitability or trade cycles
- Capital dredging is tied to port expansion and draft deepening programmes, so it rides the port capex cycle
- Capital work is tender-driven, lumpy and competitive, so revenue and margin swing with award timing
- Mobilising a dredger to a new site is expensive and slow, so utilisation depends on winning geographically clustered work