Virtually all new building order activity has plunged to levels close to or even zero, apart from some niche vessel types.
Virtually all new building order activity has plunged to levels close to or even zero, apart from some niche vessel types. The late1st monthly report by ship broker George Moundreas indicates that this trend is shaping the future state of the supply/demand balance, which could lead to significant gains to ship owners. The Piraeus-based ship broker said that the requests to cancel ship orders are on the rise, but not all of them are fulfilled. Apart from established yards, s1maller and medium-sized ones are facing acute problems in realizing their assumed orders. ?These yards had based their plans on the expansion of existing or the construction of new facilities, which now can"t realize due to financing difficulties, or (in the case of China) government limitations imposed in new yards? says Moundreas, adding that the scrapping activity of older vessels with an emphasis on dry bulk tonnage suggests a momentum building, which could lead to a record year in terms of numbers and volumes of ships retiring. According to Clarkson, the number of scrapped ships worldwide in January reached as many as 75, representing 20 percent of last year's total at 372.
Further to that, despite the frequent turbulences, the dry bulk freight market is heading towards levels, which although they don"t remind the market of May 2008, they allow room for solid returns on investments made during the ?good? new building prices period. With six months of almost no new orders placed, there could be a ?black hole? delivery period from 2011 onwards. This could limit tonnage supply further and if the world economy has returned to healthy levels of development by that time, then the owners of vessels scheduled for delivery during the period of 2010 ? 2011 could very well be rather fortunate.
That said, orders of only nine ships were made in January worldwide, a meager six percent of last year's 151 ships, according to the global shipbuilding industry researcher Clarkson. Four went to Korea and five to China, while shipbuilders in other regions, including Japan and Europe, did not receive a single order. In January, the global shipbuilding industry saw orders for new ships fall 96 percent from a year earlier, based on CGT (compensated gross tons). Korea's "Big 3" shipbuilders -- Hyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding and Marine Engineering -- also received no orders in February.