2022 shipbuilding volumes slide, but order value tops US$124.3Bn

China tops global rankings

For the fourth year in a row, Chinese shipbuilders topped the world shipbuilding ranks, signing orders for ships of 20.8M CGT, good for a 48.6% market share of new orders. South Korean shipbuilders narrowed the gap between their Chinese rivals, winning ship orders of 16.3M CGT in 2022. Still both Asian shipbuilding countries saw their shipbuilding volumes fall, with China dropping 21% y-o-y and South Korea, 9% y-o-y.

Japan, a distant third in the world standings, signed shipbuilding orders for 3.3M CGT, down 50% from 2021.

Tightening shipyard capacity

In his analysis, Mr Gordon cited a noticeable rationalisation in shipbuilding capacity over the last decade. “With only 131 ‘large’ active yards (down from 320 in 2009), we estimate shipbuilding capacity is about 40% lower than a decade ago. Our monitoring of individual facilities suggests only moderate or marginal capacity increases in the medium term,” he said.

In many cases, shipyards that are capable of building container ships, LNG carriers, bulkers, VLCCs, tankers and other large vessels, do not have the shipbuilding slots available.

“Shipyard forward orderbook cover has edged up to 3.5 years (from 2.5 years in 2020) and prices increased 5% across 2022, but were 15% higher on average in 2022 compared to 2021,” said Mr Gordon.

Again, one sector seeing continuing price increases was LNG, where prices edged up 18% y-o-y.

Preparing for alternative fuels

“At the heart of reducing shipping’s 2.3% (855 mt) contribution to global CO2 will be an unprecedented fuelling transition and we project increasing underlying fleet renewal requirements as the decade develops,” said Mr Gordon. He said the entry into force of IMO’s EEXI and CII this year “is a hugely significant milestone in shipping’s decarbonisation pathway, as will the EU’s ETS be in 2024.” He described the latter as a market “wildcard”.

“We estimate shipbuilding capacity is about 40% lower than a decade ago”

Shipowners are starting to choose their paths to decarbonisation, with some opting to even take two roads, as is the case with CMA CGM, which has ordered both LNG- and methanol-fuelled newbuilds.

CRS showed 61% of tonnage ordered — 35% by number — in 2022 was alternative fuelled. Over half of the tonnage ordered (397 orders, 36.7M GT) was LNG dual fuel, 7.0% was methanol (43 orders, 5.0m GT), 1.1% LPG (17 orders, 0.8m GT) and 1.2% included battery hybrid; 10.8% of orders were ammonia “ready" (90 orders, 7.7m GT), 1.4% of orders were LNG ready (31 orders), 0.1% were hydrogen ready and 22 orders were methanol ready.

Shipping emissions reductions and an aging fleet point towards fleet renewal in 2023, noted Mr Gordon, but the year “will have its marketing challenges for yards: macro-economic risk is material and may weigh on investor sentiment, alternative fuel choices remain tricky and newbuild prices and berth availability are a hurdle for some owners.”

He concluded: “There are mitigating factors for shipping and the product mix is likely to change: the container market will be weaker — although don’t rule out orders, possibly in feeders — but tankers and bulkers have historically low orderbooks (4% and 6% of fleet, respectively). Along with currency and inflation (perhaps some easing), yards will need to be as agile as ever.”