Thursday, June 25, 2009
No let-up in shipyard cancellations
Craig Eason - Wednesday 24 June 2009
SHIPYARD capacity is lower than originally thought, but the orderbook could still result in twice as many vessels being delivered than is needed over the next five years. However, demand is likely increase after 2013.
A new detailed report from Drewry Shipping Consultants has analysed the current newbuilding orderbook to assess the level of vulnerability and overcapacity.
Drewry has established three stages of shipbuilding demand between now and 2023. The results show that while productivity did not rise from 36m dwt between 2007 and 2008, the orderbook remains double the 97m compensated gross tonnage that will be required up to 2013.
During the subsequent five years, from 2014 to 2018, Drewry estimates that the industry will require 120m cgt new tonnage, and 139 cgt will be needed in the five years after that.
According to Drewy managing director Nigel Gardiner, future newbuilding requirements will be high, as over 60m dwt of older vessels head for scrapping over the next five years.
In the short term, Mr Gardiner suggested that the level of cancellations would remain high, especially in the dry bulk market.
According to Drewry figures, 6,864 dry bulk vessels were on order at the beginning of this year, giving a combined deadweight of 422m tonnes.
If dry bulk trades were to grow at the rates seen in the period 2000-2008, it would generate incremental new ship demand for approximately 100m dwt over a five-year period.
However, the latest projections suggest that over the next five years, trade growth is likely to generate new demand closer to 50m dwt.
“To this figure you must, of course, add demolitions over the period, but even then the combined total will make only a small dent on the 300m dwt that is currently scheduled to be delivered between now and the end of 2013. As such, do not expect trade growth to save the dry bulk market,” said the Drewry report.
“We fully expect the cancellations to to continue as the year progresses and as some of the announcements made several months prior become known,” said Mr Gardiner. He believes there will continue to be increased cancellations across all sectors over the coming two years as well as delays to deliveries.
Up to 30m cgt, representing 14% of the global orderbook, is currently at risk of cancellation, according to Drewry, with 170 cgt-175 cgt scheduled to be delivered up to 2013. The figures were somewhat hazy, said Mr Gardiner, as the future of a number of as-yet unbuilt Chinese yards remained uncertain.
Drewry estimates that the world’s shipyards delivered 2,173 vessels in 2008, equivalent to 36m cgt, which indicated an output only 0.4m cgt higher than 2007.
According to Mr Gardiner, this meant that the increase in shipbuilding capacity had not materialised. “The sheer scale of contracting has led to many builders committing to delivery dates based on wishful thinking,” he said.
In assessing the data, Drewry said it assessed specific criteria to determine the risks associated with the specific order, such as who the owner is, the yard and its location.
“We took the orderbook at the beginning of the year of the 10,000 plus cargo carrying ships on order,” said Mr Gardiner. “We looked at every order line by line and tried to assign some cancellation risk assessment.
Drewry’s also noted pronounced variation of risks on a sector by sector basis. The higher orderbook cancellation was clearly bulk carriers, with 21%, while in the tanker orderbook it was 8%.
