Greater ChinaShipyards

Chinese yards admit huge slice of global orderbook will suffer coronavirus delays

The orderbook for world shipping will likely be shunted backwards in the wake of the coronavirus while more than 200 vessels at repair yards in China are set to be redelivered later than planned.

A hefty 69% of the Chinese shipbuilding orderbook is meant to be delivered this year, a figure that is now expected to slide considerably into 2021.

The China Association of the National Shipbuilding Industry (CANSI) has issued a report, warning that most shipyards in the People’s Republic have been unable to resume full operations after the Chinese New Year holidays and it is very likely that shipbuilders will be able to deliver ships with delivery dates scheduled before July, while the construction requirements may need to be reviewed or modified for lots of ships scheduled to be delivered after July.

CANSI reported that the Chinese ship repair yards are also facing risk of delivery failure for over 200 ships. CANSI stated that force majeure terms had been called at many yards across the country.

It was revealed yesterday that Chinese private yard New Times Shipbuilding has issued a force majeure notice on deliveries of two newcastlemax dry bulk vessels to Tor Olav Troim’s 2020 Bulkers. The vessels, which have already been named Bulk Santos and Bulk Sao Paulo, were scheduled for delivery in April and May respectively.

Splash understands that Waigaoqiao Shipbuilding, Yangzijiang Shipbuilding, Hudong Zhonghua Shipbuilding and Hantong Ship Heavy Industry have all sent out force majeure notices to owners.

An official at CSSC told Splash that apart from delivery challenges, the yards are also facing cost control pressures due to the outbreak of the coronavirus.

“We will try our best efforts to minimise the legal risks but now epidemic prevention is top priority,” the official said.

According to CSSC, currently more than 50% of the workers have returned to the group’s three major yards in Shanghai- Waigaoqiao Shipbuilding, Jiangnan Shipbuilding and Hudong Zhonghua Shipbuilding and the yards are executing very strict healthy protection procedures with a large percentage of the workers on temporary quarantine for precaution.

As well as the delays brought about by limited manpower, as with other assembly line-related businesses across China, the yards are expected to suffer from shortages of parts and hardware in the coming months.

A coronavirus impact report by Clarkson Research Services shows that Chinese shipyards have 34% of the global market in cgt terms and Chinese repair yards have bagged 77% of the global scrubber retrofit market.

Clarkson anticipated that the accelerated output from Chinese shipyards later in 2020 could boost supply growth and long delays could increase slippage into 2021.

The Clarskon report highlighted how dependent many Chinese yards are on workers from Hubei where the virus started by the banks of the Yangtze River, a province with an acknowledged skill set in steel works. A ship repair yard in south China profiled by Clarkson, for instance, had 20% of workers hailing from Hubei.

VesselsValue data shows that Chinese shipyards have a total orderbook of 1,235 ships, of which 852 are scheduled for delivery this year.

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Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.
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