Orderbook – China Well in Front

Malcolm Latarche
Malcolm Latarche
ShipInsight

25 July 2018


The slowdown in newbuilding orders that has been evident for the last five years has seen a number of casualties among shipyards. Such is the extent of the problem that China, which has held the top spot in shipbuilding for several years now, was forced to merge its two state-owned shipbuilding concerns and effectively close a number of private yards as well.

South Korea is still China’s closest competitor but despite having the world’s largest shipbuilder in Hyundai Heavy Industries is currently well behind China in terms of both ship numbers and deadweight. The country has also fallen behind Japan in terms of ship numbers but is still comfortably ahead in terms of deadweight tonnage. South Korea has also seen government intervention in its shipbuilding sector with one of its major players Daewoo having been bailed out by the state in 2017.

Japan has become used to being behind China and South Korea for most of the 21st Century and it too has seen mergers among the major yards but less in the way of government assistance. In late June this year it was reported that Japan was considering a complaint at the WTO over South Korea’s rescue of Daewoo. It may not be an idle threat as Japan has recently brought complaints against South Korea over other trade issues.

Although the three leaders thoroughly dominate the shipbuilding industry, all are suffering from overcapacity which has allowed buyers to force down prices for newbuilds at a time when steel prices and labour costs are facing upward pressure.

In common with other shipbuilding nations around the globe, the orderbooks of all three are a cause for concern in that whereas once work was guaranteed for five years or more, today that is falling below three years and in some cases in danger of dropping below two.

How they rank

China with an orderbook of 1,596 ships for 91.6mdwt at the end of June 2018 is comfortably in top spot and in little danger of being overhauled anytime soon. Its orderbook comprises most ship types including a significant proportion of the offshore vessels still to be built.

Arguably the most innovative ships currently under construction are the series of nine LNG-powered 22,000teu containerships for CMA CGM by Shanghai Jiangnan Changxing. These are not the only LNG-fuelled boxships being built in China as four small 1,300teu ships are under construction in Guangzhou Wenchong Shipyard for Finnish operator Containerships. All of the LNG container carriers will be powered by engines from WinGd’s XDF range of dual-fuel two-strokes.

South Korea’s orderbook comprises 432 vessels for 57.3mdwt, well below that of China and although the world’s former number one building nation was once content to leave the simpler ship types for China while concentrating on more sophisticated and innovative vessels, its current orderbook does not reflect that strategy.

That is not to say that no innovative vessels are under construction. In July, Russian operator Sovcomflot took delivery of Gagarin Prospect as the first of a six-ship series of LNG-fuelled Aframax tankers. Hyundai Samho will deliver the remaining five ships through this year and 2019. The vessels have a 1A ice class allowing a wide operating range.

South Korean builders have also been leaders in LNG carrier construction and currently have 75 of the 112 vessels of the type in the world orderbook. The ships are spread across four different builders but with Daewoo having the lion’s share with 42 vessels. There are also five FSRUs split between Hyundai Heavy (2) Samsung (2) and Daewoo (1).

Japanese shipbuilding has had something of a rollercoaster ride through the last two decades during which time it has risen from second place to top spot and since fallen to third. Currently, Japan has the second largest orderbook in ship numbers (728) and the third in deadweight terms with 48.6mdwt.

Japanese builders have a reputation for innovation in ship design with many of the new bow forms having been developed by the country’s yards. Bulk carriers feature strongly in its orderbook but perhaps the most interesting vessels are the series of 20,000+ teu vessels being built for Taiwan-based Evergreen by Imabari at several of its yards. The ships will be larger than the MOL Truth and MOL Treasure built in 2017 and January this year as Japan’s first 20,000teu ships.

These ships mark first for both Japan as a builder and the owner. Evergreen was once the world’s largest container ship operator but has slipped in recent years due to its policy of not wanting to take part in the race for size that its rivals have. Last year it announced a fleet renewal plan with new series of 11,000 and 18,000teu ships. The 18,000teu vessels announced then have morphed into the 20,388teu ships now being constructed.•