Worldwide demand for new ships increased in 2013

The shipbuilding industry has recovered stronger than expected last year.

Although the global economic growth remained relatively weak in the last months of 2013, the number of new orders for ships increased worldwide in the third quarter of 2013, thereby surpassing the performance of the previous two years already. If this trend has continued in the fourth quarter (full year numbers are not available yet), the year 2013 could see the highest performance since 2007.

Remarkable were especially the increased orders of container ships between January and September. Again the by far biggest quantity of orders was recorded in bulk ships, which constituted about 32 % of global orders. However, orders for offshore and non-cargo carrying vessels were drastically reduced. The most substantial amount of ships was ordered by customers from Greece and China, accounting each for about 10% of total orders, followed by Canada, USA, Japan, Monaco, and South Korea. German orders accounted for about 4% of the world market.

The wordwide demand for new ships was further increased by state subsidies especially for Chinese and Korean ship­yards. Chinese yards secured orders worth of 12.6 mill. cgt, totalling nearly 37% of the global market share, thereby putting South Korea in second place with a market share of 34%. Japan’s producers stay in third place securing a share of 14%. The German shipbuilding industry with about 1% market share holds the tenth place. The sum of all European countries (EU-28 including Norway) amounts for about 5% of global orders.

The price for new constructions of standard ships stayed on a relatively low level worldwide, but recovered slightly based on US Dollar. However, since the Euro has increased in value relatively to the Dollar, those changes were compensated for and prices in Euro changed only marginally.

In contrast to new orders, the number of deliveries continued to decrease. If this trend has continued in the fourth quarter, the annualized number will fall by 15% compared to 2012.

Deliveries during the first three quarters of 2013 include 2,366 ships equivalent to 30.4 mill. cgt. Chinese shipyards account for 34%, putting South Korea with 32% in second place. Japan follows with 19%. German shipyards are in fourth place with a share of 1.5%.

In contrast to container ships, whose share increased from 14% to 21%, the share of bulk carriers was considerably lowered from 48% to 37%. The development of crude oil tankers, RoRo ships, ferries and other cargo vessels was below average. Yet it is important to take note of the fact that yachts and offshore structures are not covered by those numbers, an area which is a substantial factor in the production of Germany as well as some other countries.

Although 149 orders with a total of 2.4 mill. cgt were cancelled within the first three quarters of last year, the content of the order books slightly increased, as for the first time since 2008 new orders surpassed deliveries.

The strongest growth in order books was reached by Korea and the Philippines. However, at the top of the list is still China with outstanding orders of 32.6 mill. cgt and a total share of 35%. The third place behind Korea is held by Japanese shipyards. On the fourth place is Brazil with 3%, just ahead of the Philippines.

Insufficient incoming orders at German shipyards

Notwithstanding several new orders in the third quarter, the development of the order books at German shipyards in the first three quarters was disappointing. In total seven ships with 0.2 mill. cgt and a value of 1 bill. € were newly ordered.

Substantially higher than the new orders was the development of deliveries. 16 ships with 0.4 mill. cgt and a value of 1.6 bill. € were completed.

Compared with 2012, the content of the order books decreased by the end of September 2013 to 46 ships with 1.4 mill. cgt and a total value of 7.9 bill. €. Furthermore, there were seven orders for offshore wind energy structures and platforms with a value of 743 mill. €. In total the order books of the shipyards are filled with orders for about 8.6 bill. €.

According to the German Federal Statistics Office, the combined turnover of all shipyards (including naval shipbuilding, repairs, conversions, inland waterway vessels and boats etc.) amounted to 3.3 bill. € in the first three quarters of 2013. This is equivalent to 65% of the total number of 2012. The number of employees at German shipyards (companies with a staff of 50 and more) was 16,840 as of September 2013.

Outlook

Since the worldwide economy and trade are expected to grow in the future, an increased demand in international shipping is to be expected as well. Thanks to their excellent products, German shipyards and suppliers will be able to participate in this growth. They are especially well positioned

for the growing market of special purpose ships and high-end technological products.

However, due to worldwide overcapacity and economic risks, 2014 and 2015 will still be shaped by prevailing uncertainty. Hopefully a steady development sets in, leading to prevailing equilibria on the markets. To prevent the disappearance of the German shipbuilding industry from the global market, it is necessary to implement correct industrial policies, to create practice-oriented frameworks, and guarantee a level playing field for competition.

VSM