Alarm! Global new ship orders plummet in the first quarter

2020-04-10 09:00

The global newbuilding market has been severely impacted by the COVID-19 pandemic, with new orders plummeting in the first quarter and potentially halving for the entire year.

Clarkson's latest data shows that global newbuilding orders totaled 2.33 million CGT in the first quarter of this year, a year-on-year plunge of 71%. Chinese shipbuilders received 1.51 million CGT of orders, accounting for 64.8% of the global market share and ranking first. South Korean shipbuilders ranked second with 360,000 CGT, accounting for 15.4% of the market share. Japan ranked third with 180,000 CGT, accounting for 7.7%.

According to South Korean media reports, the three major South Korean shipbuilders have experienced a severe order drought due to the impact of the COVID-19 pandemic, with new orders far below expectations. As of the end of February, the total order value of the three major shipbuilders was US$1.177 billion, only 3.8% of the annual target.

Among the three major South Korean shipbuilders, Korea Shipbuilding & Offshore Engineering (KSOE) (Note: including Hyundai Heavy Industries, Hyundai Mipo Dockyard, and Hyundai Samho Heavy Industries) received US$587 million in new orders in the first two months of this year, which is only 3.7% of its annual order target. In addition, Samsung Heavy Industries received US$300 million in orders, approximately 3.6% of its annual target; Daewoo Shipbuilding & Marine Engineering received US$290 million, approximately 3.9% of its annual target.

Shipbuilding industry insiders said that the outbreak of the novel coronavirus is affecting global trade and new orders, with some shipping companies adopting a wait-and-see attitude and delaying ship orders. This means that the three major South Korean shipbuilders will face many difficulties in achieving their order targets this year.

Clarkson recently also lowered its full-year newbuilding order forecast from 71.3 million CGT to 39.1 million CGT, a decrease of 45%.

BIMCO's data also shows that newbuilding orders in the first quarter were significantly lower than the same period last year, at only 6.6 million deadweight tons, a decrease of 55% compared to 14.7 million deadweight tons last year. BIMCO pointed out that the novel coronavirus pandemic has replaced the sulfur cap as the biggest topic this year, weakening demand prospects and increasing uncertainty, leading to a decrease in newbuilding orders.

According to BIMCO's data, the decline in new orders for bulk carriers was the largest in the first quarter, falling from 6.9 million deadweight tons in 2019 to 1.6 million deadweight tons. First-quarter bulk carrier newbuilding orders included two Cape-size bulk carriers (totaling 420,000 deadweight tons), one Panamax bulk carrier (82,000 deadweight tons), and the rest were Supramax bulk carriers (1 million deadweight tons).

In the tanker market, the decline in new orders for product tankers was the smallest in the first quarter, falling by 17.8% year-on-year to 806,500 deadweight tons. New orders for crude oil tankers decreased by 53%, to only 2 million deadweight tons, including three VLCCs, and the rest were Suezmax and Aframax tankers.

The novel coronavirus pandemic has not only affected newbuilding orders but also newbuilding deliveries. Overall, deliveries in the first quarter of this year fell by 16.7% year-on-year. Newbuilding deliveries by Chinese shipbuilders were generally delayed by four to eight weeks. In February this year, the delivery volume of Chinese shipbuilders was only 398,712 deadweight tons, one-quarter of February 2019, while the delivery volume in March was about half of the same period in 2019.

According to Clarkson's data, as of the end of March, the global orderbook totaled 73.3 million CGT. Chinese shipbuilders still ranked first in the orderbook, with a total of 26.5 million CGT. South Korea ranked second with 20.7 million CGT; Japan ranked third with 10.5 million CGT.

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