Shipyards accelerate deliveries on market surge

Owners have welcomed tugboats to rejuvenate fleets this year, with shipyards ramping up deliveries and newbuildings entering competitive markets.

In Q2 2024, almost 100 tugboats left shipyards to join the growing global sector with owners enjoying rising demand as more ports and terminals are opened. International Tug & Salvage identified 98 tug deliveries in April to June, the most since it started recording deliveries in 2018, and up from 72 in Q1 2024 and 62 recorded in Q2 2023. 

Due to the timing of tug launches, completions, sea trials, delivery voyages and naming ceremonies, some of these newbuild tugs will not begin commercial services until Q3 2024, but the overall trend is rising.

Of these deliveries, Chinese shipyards produced around a quarter, while Indonesia, Malaysia, Turkey and Vietnam were also major builders of tugboats. Around 10% were built by European shipyards and another 10% in North America, while India returned as a growing tug building nation.

Most tugs built in Q2 2024 started operating in nine countries - Australia, China, India, Indonesia, Malaysia, Turkey, Saudi Arabia, South Africa and USA, while several entered the north European market.

The main builders were Cheoy Lee Shipyards, Damen Shipyards, Jiangsu Zhenjiang Shipyards, Med Marine, Sanmar Shipyards and Uzmar. ITS identified 68 owners welcoming at least one newbuild, with Boluda Towage and Svitzer adding the most in the quarter.

With this output, shipyards required new contracts to balance their orderbooks. 

In Q2 2024, shipyards secured orders for 82 newbuild tugs, according to ITS, accumulating data from various sources, although this includes 30 tugs ONEX Group has reportedly decided to build in Greek shipyards over the next three years. 

This also includes 11 tugboat contracts Egyptian Ship Repairs & Building Co has gained from three Egyptian port authorities.

BRL Shipping Consultants’ data showed the global shipyard orderbook was 376 at the end of June 2024, up from 365 at the end of March and 348 at the start of this year.

Rising shipyard orderbooks, contracts and deliveries is also partially down to a tight secondhand market, as owners are holding on to their assets, reducing the number available to purchase.

According to Marcon International, the availability of secondhand tonnage has slumped 23.4% in a year, down to 242 tugboats as of the end of May 2024, from 316 in May 2023. It is also down 55% from 534 in May 2019.

“The market for tugs of all sizes has been very tight for a while,” says Marcon in its latest tug market report. “With the current elevated newbuilding costs, owners are not interested in selling, but are instead trying to refresh equipment, renew certificates or otherwise get laid-up vessels back into working shape to meet commitments.”

Newbuilding prices have doubled in the last 10 years and costs for retrofitting older tugs have also risen. “On top of the already tight market, owners are facing even more challenges as increased machinery costs and limited shipyard space are causing issues with keeping tugs working. Many owners are faced with a no-win situation,” says Marcon.

Upgrading existing tugboats or those purchased from the tight market will also be costly.

“For those tugs which are offered for sale, they are few and far between at premium prices,” says Marcon.

Of the 242 tugs on the global secondhand market, just 26, representing 10.7%, were built within the last 10 years, or are newbuilding resales, whereas 44 (18.2%) are more than 50 years of age. Three of those are over 75 years old, with the oldest identified by Marcon being built in 1944.

Of the 242 tugs on sale in May 2024, 72 were in the US, 30 in Europe, 29 in the Far East, 22 in the Mediterranean, 21 in southeast Asia, 18 in the South Pacific, 17 in Latin America, 12 in the Caribbean, nine in the Middle East, four in Africa and eight elsewhere.