Analysts at brokers BRS have posited that shipbuilding is closing in on the supercycle territory it last enjoyed in the first decade of the 21st century.
In BRS’s recently published, extensive annual markets report, the Paris-headquartered firm looks at the massive amount of container and LNG orders last year and the increasingly full-up nature of most Asian yards.
Containerships orders jumped by more than 300% in 2021, BRS data shows with container carrier orders surpassing bulker and tanker orders for the first time in history. On top of that, there were 86 large LNG carriers ordered in 2021, an all-time record.
As a result of the ordering frenzy, BRS stated this week that most Chinese yards are now full for the next three years, with the situation similar in South Korea.
Giving rationale to suggest that a new shipbuilding supercycle is looming, BRS pointed to the steep reduction in the number of shipyards in recent years, dropping from about 700 in 2007 to about 300 by 2021. This drop saw active global shipbuilding capacity contract so that about 1,200 to 1,300 vessels can currently be built and delivered every year compared with the capacity for the construction and delivery of 2,000 vessels in the years 2005 to 2010. 75% of the world shipbuilding production is now in the hands of just nine shipbuilding groups, BRS data shows.
Looking at the existing fleet, BRS suggested that there is a growing need to replace a large number of vessels delivered between 2005 and 2010.
“There is a need to replace non-eco vessels characterised by relatively large individual daily fuel consumptions that were built and delivered before 2010. This is required not only for the sake of competitiveness but also to meet stricter environmental regulations coming in,” BRS stated, listing the likes of EEXI, CII, AER and EEOI, all impending green restraints on thousands of ships trading today.
Giving evidence against the imminent supercycle argument, BRS went on to point out that the average age of ship demolition is well above 25 years, standing at 29 years for bulkers, 26 years for tankers and 29 years for container carriers.
“This therefore suggests that the new supercycle should not start before mid-2025,” BRS predicted.
Splash readers can access the full 150-page report, covering all shipping segments, by clicking here.
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