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Container shipping shrinks as vessel order crashes

By Sulaimon Salau   |   12 October 2016   |   2:06 am

Cruise ships at Miami port

Cruise ships at Miami port

Uneasy calm may have settled in the operations of the shipping firms, as vessel ordering drops significantly in the third quarter of 2016.Besides, the increasing spate of merger and acquisitions may soon leave the importers with little options of facing higher shipping rates as the container shipping world shrinks.

The Vessel Value in its latest Monthly Market Review made available to The Guardian, stated that the number of new buildings orders placed in September 2016, dropped significantly by 92 per cent compared to the same period in 2015.

However, the container market showed a 95 per cent decrease in new builds compared to last year.According to the data, orders for bulker dropped from 67 last year to four; tanker recorded 8 orders against 70; containers got three against 64; gas is two against 28 orders, while OSV got just one order against six in the same period last year.

Orders for second hand vessels increased in bulker and containers, while tankers and gas vessels nosedived. Bulker orders stood at $518 million, followed by tanker at $191 million and containers at $190 million.

Vessel Value noted that the total activity by transaction value is down by 41 per cent, while total sales by number count are down by 21 per cent compared to September 2015.

Besides, total demolition sales for all ship types are up 25 per cent with containers recording the greatest increase in demolition numbers by 81 per cent.

Senior Analyst, William Bennett, said the premiums and discounts for vessel features change over time (fashion) and these changes are due to shifts in preferences by the market for different vessel features and characteristics, which in turn are determined by underlying customer needs, the economic environment and geo-political events.

He said VesselsValue, constantly analyse the changes and the effect they have on vessel values. However, the Clarkson Research showed that overall contracting of new vessels plunged in the three-month period from July to September to a mere 88 units.

Clarkson said the owners were not eager to invest in new buildings during the third quarter due to an oversupply in the shipping market, accompanied by low freight rates.

Clarksons also said that the shrinking order book has led the number of active yards, ones which have at least one vessel (1,000+ GT) on order, to decline since the financial crisis in 2009.

The number of ‘active’ shipyards globally has more than halved since the start of 2009, falling to around 400 shipyards at the start of September 2016.
As of start September 2016 there were 402 active yards, down 57 per cent on the 2009 peak, according to Clarkson Research.

In this article:
William Bennett

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