The reduction in the size of the newbuilding orderbook has been well documented over the past few years. Lower contracting and a massive delivery schedule have combined to dramatically reduce the number of new vessels on order.
This week, we look at how this has impacted the number of active shipyards.
Full Steam Ahead
It has been 4 years since the shipbuilding orderbook reached its peak.
In September 2008, the same month that Lehman Brothers filed for Chapter 11 bankruptcy protection, shipyards were sitting on confirmed contracts for a total of 11,305 vessels.
These were divided between 955 active shipyards, an increase from 354 yards at the start of 2000.
The orderbook had grown for 69 months out of the preceding 72, lengthening the orderbook at existing yards and generating demand for new capacity.
Many facilities were newly established on greenfield sites or new entrants to the sector, and the question at the time was just how were the yards going to deliver so many new ships anywhere near on schedule?
Dead Slow
Four years on and the shipbuilding industry is facing some very different questions.
The total orderbook has now fallen for 45 out of the past 48 months, and at the start of this month stood at 4,795 vessels.
The number of active newbuilding yards has reverted to 538, a drop of over 40% in the past 4 years.
Not only are there fewer yards, but the average number of ships being built at each yard has fallen from 12 to just 9.
In the short term, CRSL data shows that 240 of the yards that had active orders at the start of 2012 do not have vessels with a delivery date past the end of the year.
Slippage and delayed reporting of contracts will mean that some of these yards’ remain active into 2013, but this signals a sharp drop-off in the number of active shipbuilders.
By the time we reach the bottom of the cycle we could see the number of active shipyards return to preboom levels.
Changing Course
Faced with a lack of new business in conventional marine sectors, many builders have looked to diversify into alternative vessel types, with the offshore energy sector proving popular for yards able to diversify into higher value units.
A larger fleet and new environmental regulations could create opportunities for yards that carry out repairs and modifications, while others will continue to focus on hull blocks, offshore platform fabrication, naval ships, fishing boats and yachts.
However, some yards have been unable to sustain themselves in any form and have closed. So there you have it. It is not a new phenomenon to see shipyards entering and exiting the business, but the scale of this over the past decade has been dramatic.
The shipbuilding industry is adjusting to a new lower-demand environment but expansion in related sectors will continue to provide opportunities to yards that are able to respond.