Clarksons: Shipyards’ Forward Cover Drops to 2.3 Years

Image courtesy: HHI

Shipyards have been struggling with reduced vessel ordering for years as global output dropped and capacity diminished shortening their forward cover to the current 2.3 years, according to Clarksons Research.

Forward cover, one basic indicator of the volume of work that shipyards have on order, is calculated by dividing the total orderbook by the last year’s output in compensated gross tonnage (CGT). After a period of extremely low ordering in 2016, forward cover, which peaked at 5.6 years in 2008, dropped to 2.3 years having declined throughout 2016, as the orderbook shrank by 25% in CGT terms.

Looking around the shipbuilding world, yards in Korea currently have the lowest level of cover at 1.5 years. European yards bucked the trend in 2016, increasing their forward cover on the back of cruise ship orders to 4.2 years.

Fewer fresh orders have also led to a greater number of yards ending the year without receiving a single contract. During 2005-08, the number of yards to take at least one order was on average equivalent to 87% of the number of yards active at the start of the year. In 2009-15, with ordering generally lower, the figure averaged 49%. In 2016 this fell further to 28%, with just 133 yards receiving an order.

“Whilst many yards have tried to cope with the lower demand environment by slowing production or working outside their traditional product range, the statistics clearly point to huge challenges,” Clarksons said.

In 2016, 117 yards delivered the final unit on their orderbook. The peak production level of these yards, many of them smaller builders, totals around 4 million CGT. However, 163 yards are scheduled to deliver their current orderbook by the end of 2017, although slippage may mean some of the work runs on past the end of the year.

Statistically, this represents 43% of the number of yards active at the start of the year. Although these yards have been reining back capacity and outputting less in recent years, the peak production level of this set of yards totals as much as 12 million CGT.

“Global shipyard output and capacity have fallen significantly since the peak years. However, many remaining yards still don’t need to look too far ahead to see the end of their current workload. The shipbuilding industry will be hoping to see a return to a more active newbuilding market sooner rather than later,” Clarksons added.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Nov 2017 >>
MTWTFSS
30 31 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 1 2 3

Maritime Information Warfare 2017

Maritime Information Warfare will focus on the growing need for navies to develop their information exploitation capabilities…

read more >

INTERNATIONAL GREEN SHIPPING AND TECHNOLOGY SUMMIT

The Summit will gather key marine experts and companies around the globe which have a big influence in the industry…

read more >

The CWC 18th Annual World LNG Summit & Awards Evening

The CWC World LNG Summit will continue to give you access to premium networking opportunities as it brings together the who’s who…

read more >

Marintec China 2017

The largest maritime event in Asia Pacific, Marintec China connects maritime professionals from the entire shipbuilding supply chain together.

Over the years, Marintec China has grown to reflect the size and importance of the Asian maritime market. 2015 event is another record-breaking edition with the largest exhibition area and the highest number of industry professionals attending ever. The encouraging figures proven that China remains one of the major shipbuilding nations and Marintec China has been the most authoritative platform in Asia.

With the maritime industry facing great opportunities but also many challenges, it is important for the industry to connect and engage more to ultimately win new business in globally-significant markets. A visit to Marintec China is a great way to learn about the latest technology and innovation of the supply industry, a platform for industry professional to meet face to face, make connection and do business.

Marintec China is poised to be the definitive event and is undoubtedly a must-attend for all involved in the maritime industry.

Marintec China will be held from 5 to 8 December 2017 at the Shanghai New International Expo Centre in Shanghai, China and continue its dedication to serve as the “LEADING” platform “CONNECTING” the community and “STRENGTHENING” the maritime industry.

Marintec China offers the perfect opportunity for companies serving the maritime market to showcase their innovations, products and services to a wide audience. A platform for face to face meetings in business, creating new relationships and consolidating existing ones.

More info

read more >