Shipbuilding order book hits 17-year low

The order book for dry bulk, container and tanker ships has reached its lowest point in 17 years, due to the effects of COVID-19 on the industry.

BIMCO’s newly-released data showed that deliveries of new vessels have proved more resilient (-2%), as shipyards work through lockdowns to meet their delivery schedules and remain busy.

It revealed that the order books for dry bulk and container ships, in particular, have fallen sharply. At 63.4 million deadweight tonnage (DWT), the dry bulk order book is at its lowest level since April 2004, and 34.7 per cent smaller than 12 months ago.

Similarly, the order book for container ships fell by 10.3 per cent in the past 12 months to its lowest level since September 2003.

The fall also left the order book to fleet ratio at its lowest level in many years at just 7.7 per cent.

BIMCO insists that low ordering activity is in no way a reason for a flurry of new contracting activity, stressing that even at this ratio there is a significant amount of tonnage especially given the poor outlook.

In the first seven months of the year, it stated that contracting for dry bulk vessels fell by 65.6 per cent from the start of the year, and orders for new container ships were down 37.7 per cent.

BIMCO’s Chief Shipping Analyst, Peter Sand, said: “Contracting activity has been quick to feel the effects of the pandemic with owners and investors showing little appetite for new ships,”

“The tanker shipping industry has also recorded a fall in its order books, though not as sharp as the falls in dry bulk and container shipping books. This is primarily because the tanker order book has been at a much lower level than that of dry bulk and containers in the past two decades. The order book for crude oil tankers stands at 36.3 million DWT and for the oil product tanker fleet at 12.1 million DWT, down 4.2 per cent and 12 per cent from 12 months ago respectively.

However, it noted that despite the rise in demolitions and decline in deliveries in many sectors, the fleets continue to grow because in volume terms, deliveries are much higher than demolitions.

Sand said: “The continued increase in the supply of ships, despite higher demolitions and lower contracting, cannot be ignored as the volume of world trade is set for a considerable drop this year, and not forecasted to return to pre-pandemic levels until at least 2022. While the decline in contracting will result in slowing fleet growth in the coming years, balance in the shipping markets may prove elusive for many years to come.”