Japan's shipbuilding industry remains firmly in second place globally

2017-03-17 09:00

At the end of last year, the order backlog of Japanese shipbuilders surpassed that of South Korea for the first time since 1999, securing the second position globally. Despite the current weak global shipbuilding market demand, Japanese shipbuilders have secured a large number of new ship orders thanks to their diversified ship types and support from domestic ship owners. The number of active shipyards is increasing, and the order backlog remains relatively stable. Among China, Japan, and South Korea, Japanese shipbuilders have experienced the slowest decline in order backlog and have firmly secured the second global position.

Clarksons' recent report indicates that as of early March, Japanese shipbuilders held a total order backlog of 775 vessels and 18.9 million CGT, second only to China, ranking second globally. In terms of CGT, this is the lowest monthly order backlog for Japan since February 2014; however, among China, Japan, and South Korea, Japanese shipbuilders showed the lowest year-on-year decline in order backlog at only 23%, compared to 28% and 36% for China and South Korea, respectively.

Furthermore, by dividing the total order backlog by the previous year's output (in CGT), we obtain an indicator of the workload that the order backlog can support. Japanese shipbuilders currently have an order backlog that can support 2.7 years of work, the highest among China, Japan, and South Korea. The order backlogs of Chinese and South Korean shipbuilders can support 2.5 years and 1.5 years of work, respectively. Currently, 59 Japanese shipbuilders have at least one new ship order (1000+ GT), compared to 120 and 16 for China and South Korea, respectively. The top six shipbuilding groups in Japan each have an order backlog exceeding 1 million CGT, accounting for approximately 70% of the total order backlog of Japanese shipbuilders.

In recent years, the types of ships in the order backlog of Japanese shipbuilders have become more diversified. In March 2012, bulk carriers accounted for 74% of the order backlog (in CGT), but this has now decreased to 34%. Meanwhile, tankers have consistently accounted for around 25% of the order backlog, while the proportion of container ships and LNG carriers has increased from 5% in March 2011 to 34%. Of all container ship orders held by Japanese shipbuilders, 85% (in CGT) have a capacity of 12,000 TEU or more; for LNG carriers, 83% have a capacity exceeding 15,000 cubic meters. Thanks to these large vessels, Japanese shipbuilders have 1.8 million CGT of new ships under construction scheduled for delivery in 2020 or later; in comparison, Chinese and South Korean shipbuilders have only 100,000 CGT and 400,000 CGT, respectively, scheduled for delivery after 2020.

Most of the new ship orders received by Japanese shipbuilders come from domestic ship owners. Currently, 70% of the order backlog (in CGT) comes from domestic ship owners. Orders from NYK Line, Mitsui O.S.K. Lines, Kawasaki Kisen Kaisha, and their subsidiaries account for approximately 16% of the order backlog of Japanese shipbuilders. While Chinese and South Korean shipbuilders also benefit from domestic orders, the Japanese fleet size is 163.6 million CGT, ranking second globally, compared to 140.4 million CGT and 55.1 million CGT for China and South Korea, respectively.

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