Decline in new orders bulk carriers records for the first half of 2024 by BIMCO.
The Maritime Union, which is one of the world’s largest shipping industry organizations, points out that new shipbuilding has declined sharply, at a rate of 34.2% compared to the previous year.
As is typically noted, the decline in new orders is being observed despite favourable market conditions. The 6.5% annual increase in newbuilding prices could impede the conclusion of new contracts, BIMCO analysts characteristically note, thus explaining the attitude of shipping lines.
However, in the second-hand market, where prices are up 15.2% year-on-year, the pace of sales continues to pick up, rising 11.7% this year.
BIMCO focuses on other factors. “Limited shipyard availability and uncertainty about fuel and demand prospects may contribute to this hesitation,” it says.
The shipyards
“O shipyards still busy with orders ships in other areas.
The order book for container ships and LNG carriers is extensive, while tanker orders have increased from 2023 onwards.
A ship for which a shipbuilding agreement is concluded today could be delivered after the end of 2026, especially in the case of larger ships.
By then, there is a risk that the current strong market conditions will have subsided,” adds BIMCO.
He adds: “Uncertainty in deciding which fuel a newbuild should use could also impede new contracts from being concluded. Shipowners have expressed concerns about whether the alternative fuels will be available in most ports and regions in the short to medium term.
Finally, shipowners may be concerned about the demand outlook for certain products. Coal shipments may peak this decade, while developments in green steel production using steel scrap could affect iron ore shipments in the longer term.”
The average bulk carrier is 12.3 years old, less than the tanker and container sectors, and only 8.9% of dry bulk capacity is more than 20 years old.
The current order book is 9.4% of the fleet capacity and should be sufficient to replace the capacity of recycled vessels in the short term.
Supramaxes and Panamaxes hold the majority of the order book, accounting for 34.5% and 32.6% of inbound capacity, respectively.
From the second half of 2023, the hiring of panamaxes decreased, while the hiring of capesizes increased marginally.
Handysizes represent only 3.8% of the order book, despite 14.2% of their capacity being over 20 years old.
Several of these vessels, when recycled, will likely be replaced by supramax class vessels.
In the medium to long term, new construction contracting will increase due to stricter climate regulations, estimates BIMCO.
Fleet renewal will become a necessity as it becomes increasingly difficult for older vessels to comply with regulations.
Furthermore, as the use of alternative fuels increases, a clearer path to decarbonization is expected to emerge, reducing uncertainty.
Newbuilding activity remains robust, with ship deliveries extending to 2028 for bulk carriers, oil tankers and container ships, and to 2030 for gas carriers.
As a result, many shipyards that had previously been idle for years are opening or expanding. Even as China has expanded its shipbuilding capacity through restarts and expansions, a significant labor shortage could hamper the pace of growth it aims to achieve.