China’s independent yards have faced significant challenges in recent years against a backdrop of subdued global contracting, according to Clarksons Research.
The yards experienced particular pressure, with just 14 independent yards taking orders for ships of 1,000+ GT so far in 2017, down from 162 in 2010. Currently, there are 54 independent yards active, down from 271 at the start of 2010.
Ordering at independent yards has recently been dominated by the larger builders, with the top five builder groups accounting for 95% of dwt ordered at independent yards so far in 2017, up from 48% in 2010.
“Yet big independent yards are still facing pressures, partly due to limited bulker ordering, with this sector having historically played a major role,” Clarksons said.
Independent yards have also benefitted less from domestic ordering than state-backed builders, with state-backed yards accounting for 72% of bulker tonnage on order to Chinese owners, while the top 5 independent builders account for 22%.
Even so, the largest private yards are still playing a key role, benefitting from economies of scale, cost controls and a more flexible working schedule. Two of China’s five largest builder groups in terms of dwt on order are private and the orderbook at the top five independent builder groups stands at 18.6 million dwt, 23% of dwt on order in China, and not too far away from the size of the orderbook at CSIC yards (14.3 million dwt) and CSSC yards (23.3 million dwt).
In contrast, smaller independent yards have been especially vulnerable, with many struggling to win orders and obtain finance. Some have been restructured, while others are now focussing on repair or construction of smaller units such as inland ferries and fishing vessels.
China’s independent yards have seen significant consolidation over recent years. Nevertheless, the country’s independent yards remain important, with developments in this sector expected to continue to form part of Chinese shipbuilding dynamics.