Global shipyards 'In Crisis'

With the backlog shrinking and newbuilding prices in depression, many shipyards in the world will face serious management crisis in 2012.

According to Clarksons, Chinese shipyards' overall orderbook is 146m dwt (43%), while South Korea has 98m dwt (29%) and Japan 61m dwt (18%). Many shipyards are under pressure to win additional newbuildings due to dwindling forward workload.

During the great boom in 2008, the orderbook as a percentage of deliveries reached 570%, shipyards having had almost six years of work in hand. However, the ratio dropped to 294% in January 2011 and to 209% in March 2012. In the bad economic times of 1999, the ratio fell to as low as 193%.

Overall, shipyards now secure about two-year workload, however, many small-and-medium size shipyards are close to see the bottom.

Meanwhile, recent statistics suggest that the downward spiral is likely continue, as the ratio of contracts to deliveries has fallen to a new low.

Normally, this ratio should be 100%, contracts being equal to deliveries. Between 1998 and 2002, the ratio averaged 113%, then, during the boom, from 2003 to 2007, the ratio climbed to 350%. But, since 2009 the ratio has averaged just 46%, and in 2012, it plunged to 22%, Clarksons reveals.

At a regional level, contracting in Korea and China stood at about half the level of deliveries in 2011, while in Japan, contracts were only about 20% of deliveries.

Yards are taking action to survive from lack of orderings. For instance, yards diversify into intensive markets, such as LNG and offshore, or adjust schedules, etc. However, less competitive small-and-medium yards are facing crisis of falling behind.

If the present trends continue, the orderbook will soon fall to the lowest percentage of deliveries since the 1980s. Some shipyards, getting dangerously close to the cliff edge, would be better to come up with survival strategies.


Published : May 15, 2012