Boxship cancellations hit 6.7% of orderbook.
Cancellations of containership orders have reached 140 ships for 436,000 teu since the start of the financial crisis in September 2008, according to Alphaliner records. The level of cancellations is lower than the ones observed in the bulk carrier and tanker segments and it represents 6.7% of the 6.51 million teu containership orderbook at 1 October 2008.
The cancelled orders include 27 containership orders that were converted into other vessel types by their owners. The remainder of the cancelled orders were outright cancellations or orders that have been delayed to such an extent that they are believed to have been dropped, especially in cases where shipyards faced difficulties in meeting contractual deadlines allowing owners to get out of their commitments. Further cancellations could emerge as discussions are still ongoing between the shipyards and owners. Also, some cancellations may not have been disclosed yet.
The list does not include cancellations of contracts for ships whose construction had already commenced, as well as for completed ships which have not been delivered due to their owners" failure to make full payments. These cancellations have not been included in the statistics as the ships will still enter the fleet as the shipyards will resell them or reach an eventual financial settlement with the original owners.
Cancellations were observed in all size segments, with the largest number of cancelled orders in the 1,000 to 1,800 teu size range. A total of 54 cancellations in this size range was recorded. Cancellations in the larger sizes were less common, but they constitute a large part of the capacity cancelled. Although only 31 units of 4,000 teu and above were cancelled (22% of all cancelled orders), they represent 52% of the capacity (228,500 teu) removed from the orderbook.
NYK was among the latest companies to confirm the cancellation of seven containership orders, with two orders of 9,600 teu ships converted into 300,000 dwt VLCC tanker orders and five units of 4,900 teu converted into bulk carrier orders. The seven ships were originally scheduled for delivery in 2011.
The NYK initiative followed the decision of compatriot K Line to convert orders for three 4,500 teu ships into bulk carriers. Interestingly, these 4,900 and 4,500 teu overpanamaxes were part of full sets of nine- and ten-ship-orders, contracted en-bloc. Most likely, they had been contracted to serve a specific route for their respective owners as part of long term plans. The financial crisis has upset these plans. Japanese companies are the most affected by the current crisis in terms of loss of market share. The Japanese carriers have embarked on a revised strategy to reduce their exposure in the container sector, contrasting with pre-crisis development objectives.
The bulk of the cancellations were, however, made by German non-operating owners (NOO), with 98 out of the 140 cancellations recorded made by this group, most of which are believed to be funded by KG structures.
Amongst the shipyards affected by the cancellations, Chinese yards suffered the highest number of cancellations with 43 units cancelled, including 6 conversions. However, the impact of the cancellations has hit German yards hardest. A number of them was forced to exit from building containerships or will stop building them in the near future. The majority of the units cancelled were originally scheduled for delivery this year, with 74 units for 207,00 teu initially due in 2010. A further 48 units for 189,000 teu that have been cancelled were scheduled for 2011 delivery. This includes six VLCS units of 12,825 teu ordered by NSC Schiffahrt (Neromar Shg Co).