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>

<< Apr 2017 >>
MTWTFSS
27 28 29 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

THE 30TH WORLD PORTS CONFERENCE Enabling Trade Energizing The World

This event is expected to have more than 500 attendees from the field of port, logistics, shipping and maritime industry…

read more >

Singapore Maritime Week 2017

Singapore Maritime Week (SMW) is the leading maritime event in Singapore. Driven by the Maritime and Port Authority of Singapore (MPA), SMW…

read more >

Breakbulk Europe 2017

For more than a decade, Breakbulk Europe has served as the networking hub for industry professionals who do business in Europe — or would like to! Exhibitors and sponsors include cargo owners, ocean carriers, freight forwarders, ports/terminals, heavy haulers, equipment companies and more that are involved in this specialized industry.

In addition to exceptional networking opportunities, Breakbulk Europe provides a dynamic conference, along with a range of educational and training workshops — intensive all-day classes held the day before the exhibition opens as well as many on-the-floor sessions.

  • Over 7,600 participants attended Breakbulk Europe 2016
  • Meet with over 400 exhibitors and sponsors
  • Hear from industry experts, including leading shippers, during the conference sessions
  • Learn new skills in the educational workshops held before the exhibition and on-the-floor micro-seminars and exhibitor-led sessions during the event

More info

read more >

Smart Operations

Smart Operations events, from Fathom Maritime Intelligence, examines how to use intelligent shared integration, and connected operations…

read more >