Newbuildings become more desirable
by Richard Scott FICS, member of London & South East Branch Committee, 14 December 2021
Amid reviving shipping market confidence a pickup in newbuilding orders has gained momentum this year. The main focus has been on container ships, accompanied by stronger orders for bulk carriers and gas carriers, while tanker ordering remained subdued.
In several categories contracts agreed with shipbuilders in the first ten months of 2021 exceeded annual totals seen last year. Container ship contracting saw a spectacular increase, to a volume of 37 million gross tonnes in January-October 2021, similar to the total for the entire period of the past four years.
The world order book for merchant ships of all types stood at 158m gt at the end of October, almost a fifth above its level at the end of 2020, based on Clarksons Research data. Compared with the existing world fleet, orders were equivalent to about a tenth of current capacity. Most newbuildings are scheduled for delivery in 2022 and 2023.
It has become clearer as ordering progressed that there are substantial restraints holding back activity. Among these, uncertainty about alternative fuels and technology needed to cut carbon emissions is at the forefront. Also, it is unclear how much transport capacity will be required when some global seaborne trade flows - such as coal and crude oil – may cease growing and eventually decline over the longer term.
Consequently investors have been looking especially carefully at the prospects for a newbuilding, with a usual lifetime of twenty or more years. Decisions, normally difficult, are now more problematical and complex than previously. A discussion is contained in the following article.
An uneven revival in newbuilding orders, available at:
(Hellenic Shipping News Worldwide, 7 December 2021)
A more detailed article about this topic in PDF format is obtainable from me at: