Customer first

The Chinese shipbuilding market suffers like other regions from the massive slump in newbuilding orders. This has led to a significant shift in business. However, Chinese shipbuilding remains very important for the global maritime industry, as shown at the »Marintec« trade show in Shanghai
Those were busy days in the beginning of December, when the coastal city was hosting one of the biggest maritime[ds_preview] exhibitions. According to the organiser more than 2,000 exhibiting companies from 34 countries and regions occupied 80,000m2. Over 60,000 visitors from 90 countries and regions had been expected.

The weak market conditions caused some bustle for the supplier industry at the trade show. As the slump in the oil price led to a significant reduction in investments of the offshore market and the merchant shipping suffers from a long crises, newbuilding orders are on a very low level – with negative consequences for the supply industry. So exhibitors used the »Marintec« show as a chance for intensive sales activity.

Always in focus: the customer and his specific business. Be it from the engine, lubricant, eletronic or the service segment, steadily emphasized in Shanghai was the fact that it is essential to keep an eye on the ground in the market and to adapt the portfolio accordingly. »The times, in which it was no problem to perform with a standard portfolio, are definitely gone. Today it is more important than ever to see specific needs in an early stage and react with appropriate offers. Every single order is important,« said one European exhibitor.

Study confirms shift

In the context of the trade show, a study about the Asian and the Chinese maritime industry in particular was released, based on a survey across market actors players.

The survey confirms a major shift in China’s shipbuilding and shipyard industries into the offshore sector in recent years with offshore vessels topping activity for newbuildings. The Chinese shipyard industry has been undergoing a tumultuous period with slowdown in conventional ship orders leading to a state-backed restructuring of the industry. The other major trend identified has been the development of the ecoship both in terms of newbuildings and retrofits in the conventional shipping sector.

However, the fall in the oil price has loomed large over both developments and respondents reported a strong impact on demand in offshore and for eco-ships. For equipment suppliers there were mixed views on how much impact regulatory developments in the environmental sphere are having on the product mix, but good demand growth is seen for technologies addressing emissions and alternative fuels such as liquefied natural gas (LNG). For the latter there was a 95% positive response by companies involved in that business.

Technological developments were identified as a strong driver in the equipment sectors both at sea and onshore in ports. The ultra-large containership was also seen as a development driver in the ports sectors with landside infrastructure racing to catch-up with the latest developments in terms of vessel size with ships of 18,000TEU and above.

However, required developments – environmental, technological and infrastructural – will continue to drive demand across a variety of sectors, and companies will need to be well placed to respond to these developments, it was said.

The shift in the product mix towards offshore could be clearly seen in which sectors of shipping respondents saw the highest demand for newbuildings. Offshore support vessels were selected by 41% while 36% chose offshore rigs (respondents could choose more than one vessel sector). In terms of conventional shipping, containerships ranked highest at 36.5% while 31.7% saw demand for bulk carriers – until a few years ago the mainstay of Chinese shipbuilding. Reflecting China’s movement up the technological ladder accounted for 25% seeing demand for specialized vessels. The various tanker segments all figured at 20–23%.

Eco-ships have played a major role in demand for newbuilds of conventional ships over the last two to three years as ship-owners struggled with both high fuel prices and low freight rates thus making fuel saving paramount. This demand was reflected by 60% of the respondents saying that their company was involved in eco-ship designs, and green technologies, and fuel saving devices for either newbuildings or retrofits. Retrofit technologies include bulbous bow replacements, Mewis Ducts and new propeller designs, all of which can be fitted to existing vessels. However, the fall in the oil price has had a sharp effect on the demand for eco-ships with 72.5% saying they had seen an impact.

Views on the impact of the government-led restructuring of the Chinese shipbuilding industry were more evenly split. In the course of its attempts to consolidate and streamline the sector, the government issued a so-called »white list« of 72 Chinese shipyards in 2014.

Of the respondents 48% said the restructuring had had an impact on their business while 52% said it had not.

The restructuring was seen as favouring the larger, state-owned shipyards and that as result smaller shipyards were closing down. Some saw this as affecting the demand for their products as they had fewer yards to sell to. Others saw it as a positive rationalisation of the industry with a focus on stronger yards that could produce higher quality products, and in turn drive demand for the better quality suppliers. However, some also feared that a focus on state owned yards would impact private suppliers, the state-owned yards would source from other state-owned enterprises.

The rapid move by Chinese shipyards to become more involved in the offshore sector in recent years was reflected in the newbuilding demand reported by survey respondents. Primarily respondents in the offshore business were involved in three areas of the sector. Three-quarters were in offshore vessels related business, 56% in offshore platforms, and 41% in systems and technology. Just 5.5% where involved in the business related to the offshore gas segment.

An important driver in the equipment sector is the development of new technologies. The »wired ship« with broadband internet capabilities is today very much becoming a reality. Electronic navigational systems, that can be updated at the touch of a button instead of the old-fashioned paper charts that have been used for centuries, are becoming mandatory. Shipping companies are leveraging on technological capabilities to employ monitoring and efficiency systems so that ship managers can monitor performance real-time from the shore.

In the longer term outlook there is a heated debate whether ships themselves could be fully automated in the future combined with remote shoreside operation. In terms of companies that said they provided electrical equipment and systems the increasing use of technology in the shipping industry was seen as a strong driver for their business. On a rating 1 to 10 (1 none, 10 most) 65.5% gave a rating of 6 or above, with the largest percentage (21.6%) giving a rating of 8.