Clarksons: The Changing Nature of Orderbook

A substantial decline in size of the orderbook left many yards struggling to secure contracts as state-backed entities received the majority od orders.

While the number of yards accounting for the first 25% of the orderbook has remained steady over the last decade, as of start September 2017, 50% was on order at 24 yards, down from 32 yards ten years earlier. Meanwhile, 75% of the orderbook was on order at 59 yards, down from 101.

The share of the Chinese orderbook in CGT terms accounted for by the top 10 yards in China increased from 34% in 2007 to 43% in September 2017.

Similarly, in Japan and Europe the top 10 yards have seen their orderbook share grow, from 49% and 30% respectively to 60% and 76% over the same period, with many European yards ceasing operations, even if others have recently benefited from firm cruise ship ordering.

Meanwhile, in Korea, yards in the big 3 builder groups, Daewoo Shipbuilding & Marine Engineering (DSME), Hyundai Heavy Industries (HHI), and Samsung Heavy Industries (SHI), have seen their share of the Korean orderbook grow to 92%, up from 70% ten years earlier.

Larger yards have also taken a bigger share of the contracts placed in 2017 so far, further entrenching orderbook consolidation. Only 108 yards have reportedly taken a vessel order in the year to date, with 70% of active yards yet to take a new contract in 2017.

“For the industry as a whole, the change in the structure of the orderbook makes the impact of the reduced orderbook and today’s limited contracting environment very clear indeed,” Clarksons Research said.

With the orderbook having peaked back in 2008, there has been significant and well-reported consolidation in the shipbuilding industry over the last decade. The total number of active yards has fallen from 860 in 2007 to 357 as of start September 2017, reflecting the high number of shipyards leaving the market unable to find work, as well as significant restructuring and M&A activity.

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