An evident slowdown
Updated 5 Sep 2019
Another factor that could help explain the 2019 spike is the effect of the 2004 Ballast Convention. No doubt, many owners will have ordered vessels in anticipation of the need to have treatment systems on board any ships sailing fairly soon after the convention came in to force last year. In the case of near end of life vessels, a replacement would probably have been a more economic option although the oldest vessels tend not to be owned by organisations with ready access to cash for newbuildings.
As it transpired, the IMO’s decision to grant extra time until effectively 2024 for some vessels, may mean that some operators will hang on to vessels for longer to get the maximum earnings from them prior to scrapping.
Figures can be deceptive and although there is an obvious downward trend in terms of numbers and deadweight tonnage delivered, what is less obvious is that the average size of ship has increased by around 30% in deadweight terms. It could be argued that because there are far fewer offshore vessels – which tend to be small in deadweight – following the oil price collapse in 2014, the average deadweight would inevitably increase.
There is some merit in this argument, but it cannot be denied that the average size of container vessels for example has greatly increased over the same period. There is evidence also that more bulk and ore carriers in the larger sizes are being built and the number of orders for large tankers has also been buoyant.
Looking ahead to next year and beyond, the figures for the future orderbook are obviously not cast in stone and there will likely be many more added to each figure. As things stand, it is also quite likely that a good many included in the figures will be cancelled if the difficult trading environment continues.
If it is considered that the phase-out of single-skin tankers was complete by 2010, it must be assumed that, with the usual 20-25 year life span, many of the vessels built from 2005 will soon be approaching the point where they will be scrapped and need replacing. Of course, if the various governments around the globe are serious about phasing out fossil fuels, whether there is a need for new ships in great quantities is something that will need to be considered. Against that must be weighed the need to feed a growing world population and to manufacture the products they will inevitably need – that alone should mean that the future for bulkers and container ships is a little brighter.
More than 40 countries are involved in building the vessels covered in the tables although some of these are represented by just a single vessel covering the period from 2015 through to 2025. The leading nations – China, Japan and South Korea – will come as no surprise but all three and more have been affected by the slowdown and have seen yards close or be swallowed by competitors.