Due to several economic and political conditions, Norways shipowners have lost part of their optimism. They expect a difficult year 2015 with next year to be even more challenging
The Norwegian Shipowners Association sees several problems directly impacting the maritime industry: falling oil prices, heightened geopolitical tensions, and sluggish[ds_preview], uncertain growth in the global economy. CEO Sturla Henriksen emphasises the shared responsibility of the industry and the government in seeking solutions, and calls for productive dialogue in the times ahead: »The industry itself is doing all it can to survive in these challenging times, and we are encouraged by the signals sent out by the government before Easter indicating changes in the rules governing paid leave. We consider four items to be of particular interest: a competitive shipowning tax; strengthening the Norwegian flag by relaxing Norwegian cabotage rules; a strong net wage scheme to encourage employment of more Norwegian seafarers; and improved terms of private ownership. One thing we know: Proactive policies yield good results, even in challenging times.«
Norway is one of the largest maritime nations. According to the Association, the country has the world’s 6th largest shipping fleet measured in market value. There has been a comprehensive fleet renewal. The average age of ships has gone down by nearly three years since 2007, and is now eleven years. Especially the offshore service fleet has grown over the past decade by 354 ships, to 637 ships today, a growth of 80%.
The shipowners are less optimistic than last year regarding both turnover and profitability. »We have seen a marked negative shift in just a short time. 2015 will be a challenging year for Norwegian maritime companies, but we must be prepared for 2016 to be even more challenging,« states Henriksen. The companies anticipate growth in turnover of only 2.3% this year, up to 268 bn NOK, compared to 6% anticipated growth last year. All segments except offshore service expect to see some growth in turnover in 2015.
The offshore segment shows the clearest shift. Offshore service shipowners expect a drop in turnover of 4.2% in 2015. According to Henriksen, this would mark the first drop in turnover since 2002 for this segment. The picture for traditional shipping is not as bleak. Deep sea shipowners foresee an increase in turnover of 5.1%, compared to actual growth of 3.2% in 2014. Short sea shipowners have seen moderate but stable annual growth, and anticipate turnover to rise by 2.5% in 2015. Actual growth for this segment was more than 5.5% in 2014.
Rig owners expect growth in turnover of 9.1% in 2015. This is an ambitious figure given that investment on the Norwegian Continental Shelf is expected to fall by approximately 10% in 2015, the Association said. Many contracts will be fulfilled during the course of the year.
In all only 35% of shipowners expect improved operating results on the year, compared to 72% in 2014. 42% of shipowners anticipate even weakened operating results in 2015, a dramatic increase from only 8%. The companies are also more pessimistic regarding access to capital. In 2014, around half of shipowners reported that access to capital was good or very good, while today only one out of four report the same.
Heading into 2015, Norwegian Shipowners’ Association members had 26 vessels in storage, of which 20 were ships and six were mobile offshore units. »Our members expect this number to rise to 42 by the end of 2015 – 29 ships and 13 rigs«, Henriksen reports.Although the number is still far behind the situation in the peak years 2007 to 2009, the Norwegian orderbook saw an increase of more than 20%. As of 1 January 2015 Norwegian internartional shipowners had a total of 176 ships on order. 2008 remains a record year with owners having 378 ships on order. Since then, the number of newbuildings has declined by more than 50%. Of 176 ships in the orderbook 119 are not offshore service vessels. »Among these are specialty ships designed to carry gas, chemicals, oil, cars or varios other cargos«, the Maritime Outlook of the association states. The order book has a combined value of 93 bn NOK. About half of the newbuildings will be delivered in 2015 with around 35% scheduled for delivery in 2016. The Norwegian yards do not really profit from the orders. Approximately 15% of the orders have been placed with Norwegian shipbuilding companies, the most important countries for the owners are China (32%) and South Korea (24%).
