Clarksons: Shipyards’ Forward Cover Drops to 2.3 Years

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>

<< Jun 2018 >>
MTWTFSS
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 1

TRANSTEC 2018

TRANSTEC 2018 welcomes participants to explore Russian Ports and Shipping development opportunities…

read more >

Europort 2018

From 15-17 May 2018, the 12th edition of Europort Romania willl take place in the IDU Hall in Constanta…

read more >

The 27th World Gas Conference

The 27th World Gas Conference is the leading global industry event and is the definitive gathering of influential leaders, buyers and sellers, policy-makers and experts from around the world.

You will hear critical business insights and lively debates on the most topical issues facing the global gas industry today and in the future.

From 25-29 June 2018, Washington DC is expected to host 12,000 attendees, 500 speakers and 350 exhibitors representing, more than 600 companies from 100 countries.

Presented by the IGU, this is the largest and most high-profile gas event that is conducted by the industry for the industry.

Read More

read more >

SMM 2018

This is a must-attend event – a unique opportunity to meet key players, display business strengths, establish new contacts and exchange…

read more >