Norwegian Shipowners: Tight Money Prolongs Maritime Downturn in 2016

2016 is to be an extremely difficult year for many segments of the maritime industry, says the Norwegian Shipowners’ Association in its yearly outlook report, anticipating weaker profitability, job losses and tighter capital access. 

“Expectations for developments in the capital market through 2016 are largely negative. Almost no shipowners anticipate improved capital availability, and 55 per cent expect the situation to worsen,” said the report, pointing out that offshore service shipowners are the most pessimistic regarding capital availability.

Taking into account the dramatic decline in oil price and general fall in raw material prices, the association says these factors can cause weakening of many links in Norwegian maritime value chain.

Shipping is the country’s second-largest export industry, with total value creation in 2014 of approx. USD 23 billion (NOK 190 billion) and 100,000 employees.

The Norwegian Shipowners have recorded a drop of 15 percent in ship orders by January 2016, compared to the previous year. The orders have been primarily related to offshore oil and gas, and the decline is related to the slowdown in offshore activity, according to the association.

The report also said that shipowners anticipate lower turnover in 2016, expecting it to fall by 3 percent. Positive development in turnover is expected by short sea and deep sea shipowners, while the negative one is to be seen in the offshore segment.

Weaker operating results are to be expected in 2016 as well, according to the association.

“A combined number of 4,000-4,500 layoffs and terminations are anticipated in 2016, compared with 7,300 in 2015. 3,150 jobs were cut in 2015 in the offshore service segment, while shipowners expect further 1,000-1,500 jobs to disappear in 2016,” the report said, adding that available training positions are to be reduced, too.