Shipyard bankruptcies 'aiding' the shipping industry's recovery?!

2017-05-23 09:00

Due to the continued downturn in the shipping market, a large number of shipbuilders have no ships to build and face bankruptcy. As many shipbuilders go bankrupt, shipbuilding capacity will decrease, and the global shipping market is expected to recover faster.
French brokerage firm Barry Rogliano Salles (BRS) recently stated that due to the sharp drop in new ship orders, the global shipbuilding industry has had to cut capacity to adapt to the new market conditions; currently, the reduction in shipbuilding capacity and limited order volume are restricting the growth of shipping market supply, which provides a basis for the recovery of the shipping market.
BRS data shows that since 2000, affected by the downturn in the shipping market and reduced order volume, global shipbuilding capacity has fallen by 35% to 45 million CGT; this year, shipbuilding capacity is expected to decrease by another 3 million CGT. Compared with the peak of 1150 shipyards worldwide in 2000, only 630 shipyards are currently active.
BRS believes that it can be argued that a key step in making the shipping market healthier is the reduction in global shipbuilding capacity. In the future, the trend of reduced shipbuilding capacity will continue, and China, Japan, and South Korea will have to further reduce their shipbuilding capacity. BRS expects that by 2018, South Korea's shipbuilding capacity will be reduced by 50%, China's shipbuilding capacity will be reduced by 20% to 30%, and Japan's shipbuilding capacity is expected to be reduced by 10% to 20%.
BRS stated that in 2016, global new ship orders were almost non-existent, and new ship prices plummeted. According to BRS data, the global new ship order volume in 2015 totaled 107.7 million deadweight tons, while in 2016 it dropped directly to only 34.1 million deadweight tons.
BRS said that last year, ship owners were more inclined to invest in the second-hand ship market than to order new ships; in fact, a total of 88 million deadweight tons of second-hand ships were traded in the second-hand ship market last year, while new ship orders were only 34.1 million deadweight tons.
In various ship types last year, Container ships The new ship order volume decreased the most, reflecting the long-term overcapacity and decline in the container shipping market. In 2015, the new order volume for container ships was 26.9 million deadweight tons, which dropped to only 3.3 million deadweight tons last year.
In addition to the depletion of new ship orders, another major problem that continues to plague shipyards is order cancellations, although the cancellation volume last year was slightly lower than in 2015. According to BRS data, the cancellation volume in 2015 totaled 13.2 million deadweight tons, and the figure for 2016 was similar, at approximately 13.1 million deadweight tons. However, BRS stated that the cancellation data for 2016 may still increase, as cancellations usually take some time to surface. Among the orders cancelled last year, about 57% were Bulk carriers 。
Compared with previous years, the cancellation level last year was not high. The total cancellation volume in 2009 reached 36.6 million deadweight tons, and the cancellation volume in 2010 reached 38.6 million deadweight tons. However, the volume of new ship orders at that time was far higher than in 2016, and the price level of new ships was also higher.
The current predicament of the shipbuilding industry is, in a way, the result of the shipping industry's past actions, and the recovery of the shipping industry now relies on the bankruptcy of shipbuilders to "help". The shipbuilding and shipping industries are truly a pair of unfortunate brothers.

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