Global new build vessels drop below $5 billion

The building of new vessels globally is currently on a downward trend, as the new report by VesselsValue, an international industry analyst, showed that the new build orders was below $5 billion in second quarter (Q2) 2019.

The report, obtained by The Guardian, revealed that some shipping firms had sold many of their vessels for scrap in order to survive the oil price crash and subsequent downturn in the offshore markets during the period.

It stated: “The results are disappointing, as newbuilding orders hit record lows in Q2 2019,”

The new build order slumped from $14 billion in early 2018 to the lowest level in about 10 years, according to the analysis.

New build vessels experienced the highest order in 2014, when about $35 billion orders were spent on building ships. The report showed that it has recorded a free fall since the beginning of 2019.

VesselsValue Head Cargo Analyst, Olivia Watkins, said: “In order to survive the oil price crash and subsequent downturn in the offshore markets, the industry has instead seen many vessels being sold for scrap and owners consolidating, which has led to many companies streamlining their fleets in order to reduce their operational costs.”

The container sector showed a declining trend as the rest of the cargo sector for new builds. Orders for the first half of 2019 were down a significant 49 per cent compared to same months in 2018.

“Of the bleak 48 containers that were ordered, 28 were by South Korea, clearly dominating the container new build market and vastly improving on their two orders from the first half of 2018. The domination is primarily due to Sinokor, who ordered 16 Feedermaxes (1,100 TEU, 2020) all built by Chinese shipyards, and four Handy containers (1,800 TEU, 2020) built by South Korea’s second largest shipyard, Hyundai Mipo. These orders by Sinokor account for around 42 per cent of all containers ordered so far this year,” it stated.

The total number of Bulker new build orders is down 73 per cent for the first half of 2019 compared to the same period in 2018. Tanker new build orders are down 47 per cent for the first half of 2019 compared to the same period in 2018. Also, VLCC orders are down 60 per cent for 2019 year to date, compared to the same period in 2018 despite having a good winter for rates.

The total number of LNG new build orders also fell by 39 per cent, while LPG new build orders fell by 73 per cent in the first half of 2019 compared to the same period in 2018.

Only one Offshore new build order was placed in the first six months of 2019. The order was placed by the British company High Speed Transfers for an FSV/Crew Boat on the 22nd January 2019. When considered against the same period in 2018, where newbuild contracts were placed for six OSVs, one OCV and one MODU.

Countries leading the way in terms of number of orders are Greece, Singapore, and South Korea.