Inward-looking nature of the Land of the Rising Sun will boost ship orders, reports Zeng Xiaolin
While the shipping and shipbuilding sectors are at a low ebb, Japan’s yard industry can count on a recovery due[ds_preview] to the close-knit maritime cluster of ship owners, with the state’s support, according to Mitsuhiko Ida, deputy director at the Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
The politician noted during the recent Marine Money Japan Ship Finance Forum that in the past decade, Japanese shipbuilders had to contend with stiff competition from their South Korean and Chinese counterparts. A strong currency that prevailed during the Democratic Party of Japan’s 2009–2012 government did not help the situation. It was only when the Liberal Democratic Party returned to power in 2013 did Japanese shipbuilders’ fortunes improve, as Prime Minister Shinzo Abe’s »Abenomics« policy significantly weakened the Japanese yen to revive the country’s export-oriented economy. Ida noted: »Due to yen depreciation by Abenomics and the development of energy-saving technologies in parallel with its global standardization, the number of shipbuilding orders to Japanese companies has been increasing after 2013.«
Japanese shipbuilders had a 29% market share for new orders in 2015, winning 424 orders totalling more than 22mill. GT as ship owners rushed to build ships compliant with the International Maritime Organisation’s new construction standards, which will take effect from July 2016. This was up from the annual average of 18% during 2008 to 2013. However, shipping is now at a low ebb of the market cycle, and new orders have been hard to come by.
Nonetheless, Ida said that as the world economy continues to grow, recovery is certain, and Japanese shipbuilders have the fortune of being part of a close-knit nationalistic maritime cluster. He said: »Shipping and shipbuilding market will expand with the world economy’s growth in the long term, in spite of the recent sluggish market.« Japan would have about 200 ship operators and 700 ship owners, and around 1,100 ship equipment manufacturers.
As it is, Japanese ship owners account for 37% of the country’s shipbuilders’ orderbook of 43.1 million GT as of 31 December 2015, said Masashi Terakado from the Shipbuilders’ Association of Japan. »This is the advantage of Japanese shipbuilders. Ship owners, shipbuilders, ship equipment suppliers and shippers in Japan, are strongly connected. Seventy per cent of Japanese ship owners’ newbuilding orders are placed with Japanese shipbuilders«, he added.
The Japanese shipbuilding industry has an annual production capacity of 6.3mill.GT and employs 50,000 people. While capacity and staff strength may be lower than its peers in South Korea and China, their experience and training has enabled their productivity to be higher. A shipyard worker in Japan can produce 126 GT per year, compared to 106 GT in South Korea and 40 GT in China. Japanese shipbuilders procure 95% of their equipment from compatriot suppliers, added Terakado. In addition, 60% to 70% of cargoes bound for Japan are transported by Japanese shipping companies.
In the meantime, the ministry has been striving to continue with research and development to facilitate the construction of technologically advanced and environment-friendly vessels.
The government itself is getting in on the action, with Japan’s respective prime ministers acting concurrently as the director-general of the Headquarters for Ocean Policy. The latter post was created in April 2007 to review Japan’s maritime policies every five years.
Under the Basic Plan on Ocean Policy, efforts will be made towards reducing carbon dioxide, exhaust (nitrogen oxide and sulphur oxide) emissions and other environmental pollutants from ships in compliance with regulations related to the issues and ensuing ship safety. Ida said: »Improving energy efficiency of international shipping is an important issue because of a constant increase of international shipping transport demands.«
Zeng Xiaolin
