International Shipbuilding Industry Records Show Significant Recovery and Stabilization
The signs in shipbuilding now point to a significant recovery and a stabilization of the order situation. The international shipbuilding industry has put the crisis behind them. This is underpinned by orders across all ship categories and from virtually all shipbuilding nations.
The signs in shipbuilding now point to a significant recovery and a stabilization of the order situation.
China – Shipbuilding nation number one
China is pushing forward at a furious pace and has knocked Korea off the position as shipbuilding nation number one. Trade is in flux: that is why the rising figures for this means of transport for bulk cargo are considered to be a very reliable early indicator for more inter-country freight traffic, for a newly invigorated global economy, for more rosy economic activity. A clear indication of better times ahead is also the boom in the cruise sector, an unmistakable sign both that the passengers are willing to spend money and that loans are again being guaranteed by the banks more easily.
The word “extreme” is probably the most apt description of the decline in orders for new buildings in 2009. A dramatic collapse resulted in the number of contracts falling from over 2500 in 2008 to little more than 600. Just one year earlier, in 2007, the shipbuilding barometer had had an extreme upwards swing. Contracts for almost 3500 new buildings were signed in the year before the crisis, a totally overheated market situation. A further 11,000 ships were in the unfulfilled order backlog in that year. Until 2003 the new buildings swung back and forth in a narrow range between 800 and 1300 per annum. This was followed by a sharp upturn right up to the peak in 2007. The situation has normalized and stabilized since the beginning of 2010. In 2010 the shipyards were again able to land orders for around 1650 new buildings. This was accompanied by a significant recovery of the charter rates for container ships, panamax ships and bulk carriers from the beginning of 2010. Within just a few months the rates saw a three- to four-fold increase. This increase in such a short time is assessed as a clear indication of the sustained recovery from an extraordinary market tension and a painfully low level. Parallel to this, the anchored ships in Turkey, the Gulf of Singapore and other places are setting sail again. Over 600 ships were temporarily taken out of service; now only a handful are lying at anchor. The port of Hamburg as Germany’s largest universal port is likewise reporting a very good capacity utilization; the brisk ship traffic is a further indicator for a clear improvement. Growth has returned.
Trend to lowest possible operating costs
The technical outfitting of ships of all types is clearly characterized by a trend towards minimal operating costs through low energy consumption values and a high level of environmental protection. Parallel to this development, attempts are being made to largely dispense with the use of chemicals. The systems from GEA Westfalia Separator Group are heading in this direction, whether it be bilge water and sludge water treatment with Westfalia Separator® BilgeMaster® and SludgeMaster®, fuel and lube oil treatment with compact unit and Westfalia Separator® ViscoBoosterUnit, fresh water generation with Westfalia Separator® SeaWaterDistiller or the heat recovery system EnergyMaster and the energy-saving ballast water system from GEA Westfalia Separator Group, which will be available from 2012. Despite the euphoria surrounding the invigorated growth, the entire branch is hoping that it will not again lead to such exorbitantly high, abnormal increases as in 2006/2007 which were essentially driven by ship funds because the rude awakening was quick to follow in 2008/2009. Moderate but continuous increases in the upper single-digit range would be more desirable and more predictable to cope with by all concerned.
More tonnage than ever
The shipyards in the world began to cut the accumulated overcapacities. The approximately 11,000 ships in the order backlog could meanwhile be reduced to around 8000 ships. However, it is particularly pleasing that, despite this high order backlog, the orders for new buildings, totalling 1650, have at least returned to the level of 2004. The renowned research institute Clarkson Research anticipates that more tonnage will be delivered in 2010 and 2011 than ever before, namely 143 million tdw in 2010 and 137 million tdw in 2011 respectively. The world fleet is expected to grow by 7 percent in 2010 and 8.7 percent in 2011.
Mainly bulk carriers and container ships in China
The buyers from China – surprise, surprise – proved to be particularly dedicated. Not only in terms of numbers but also gross registered tonnage, China sailed past Korea in 2010 to become the undisputed number one among the shipbuilders in the world. Roughly a third of all orders for new buildings originated from China. China has been manufacturing in particular a large number of bulk carriers and container ships for transporting bulk goods. In this way, China has manoeuvred itself into the position of being able to transport an increasing contingent of its large trade volume itself. Traditionally, GEA Westfalia Separator Group has worked closely and well with the Chinese shipyards from the very beginning. With our own plant engineering and construction facility set up in China three years ago, business can meanwhile be conducted in the local currency. Further, a plant for the production of separators especially for the marine sector will start to be built in the Chinese city of Wuqing in 2011. The spare parts availability and serviceability of the machines and plants of GEA Westfalia Separator Group all around the globe are especially attractive for the Chinese ships and all other shipbuilding nations.
Further relapse in Japan
On the other hand, shipbuilding in Japan has suffered a sharp decline. The one-time number one shipbuilding nation has dropped from producing 30 percent to now only 5 percent of world trade tonnage. And that was the market share before the earthquake and the tsunami hit the country.
Taiwanese shipping companies by contrast are placing major orders, Greek shipping companies came back with a bang in 2010, and German shipping companies and investment funds count among the largest financiers as do Norwegian buyers. Nations like India, Indonesia, the Philippines, Bangladesh and of course Brazil also experienced a pleasing upturn.
Source: westfalia, June 7, 2011;