Shipowners are having to accept ever-lengthening new ship delivery cycles.
The latest data from Danish Ship Finance shows that up to 20% of all orders will now take more than three years to deliver. And at the beginning of 2021, only about 5% of global orders require a three-year delivery period. Compared with four years ago, the delivery time of new shipbuilding contracts signed today has been extended by an average of one year.
Of the orders to be delivered in 2027, 75% are undertaken by Chinese shipyards. Capacity utilization of Chinese shipyards for 2028 and 2029 has reached 50% and 20%, with some orders for LNG carriers even scheduled beyond 2030.
Danish Ship Finance predicts that despite the short-term decline in new shipbuilding prices, shipyards may receive fewer orders in the future due to weak demand for new ships and low freight rates.
Clarksons data confirms this trend. After three years of peak orders, shipowners’ willingness to build new ships has dropped sharply, down 57% year-on-year.
According to data from brokerage firm BRS in March, there are currently about 348 operating shipyards in the world that have signed new contracts or delivered ships in the past year, which is half of the historical peak of about 700 shipyards in 2007.
BRS sees the shipbuilding industry entering a super-cycle in 2021, comparable to the boom from 2003 to 2008. But BRS forecasts new ship orders of only 100 million deadweight tons this year, well below last year’s 193 million deadweight tons.
BRS predicted in its annual report released at the end of March: “As global uncertainty continues, freight markets are under pressure again and investment decisions will be delayed. Although the existing large order volume will provide support, a new round of shipbuilding capacity expansion will have a downward impact on new ship prices. New ship prices will fall by more than 10% in 2025, depending on the type and size of the ship.”