Tuesday, August 23, 2011

Shipbuilding Goes Downhill

Global shipyards are facing a difficult downhill road having reached the summit of the latest shipbuilding super-cycle which lasted over 30 years.

Clarkson Research head Martin Stopford says the fact newbuilding deliveries have slumped by 13% in the first half of the year is clear evidence the cycle which started in 1977 has peaked.

“For now the yards can celebrate their achievement, but mountaineers scaling great peaks don't hang around at the top,” he said.

“A couple of photos and the big issue is ‘how do we get down again?”

“Shipbuilding’s the same and it could get bumpy.”

At the start of 2009, yards had orders to keep them busy for the next four years. But with newbuilding contracting taking a tumble post Lehmann, that figure has slumped to 2.6 years, Stopford says.

“Things got off to a bad start in 2009, with only 15m CGT of orders and some cancellations. In 2010 things improved with 38m CGT of orders, but that was still 25% less than deliveries, and this year orders are down another 12%,” he wrote in a report.

“If this continues, and developments in the financial and shipping markets suggests that it might, shipyards could face contract levels 25-40% below their current active capacity.”

He added: “The shipyards are making their way down the mountain, and it’s a big drop – they are only contracting enough ships to fill two thirds of their active capacity.

“Luckily they still have a couple of years work on the books, so there is still a little time in hand.

“But with black clouds gathering over the world economy, it looks as though the trek down will be much harder going than the long climb up.”

Published : August 23, 2011


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