BIMCO reports that the total orderbook has reached its lowest point in 17 years as Covid-19 has massively slowed contracting (-50%) while deliveries of new vessels have proved more resilient (-2%).
The fall in global contracting has left the orderbook-to-fleet ratio at its lowest level in many years at just 7.7%. This is however not a reason for a flurry of new contracting activity. The larger fleet means that even this lower ratio represents a significant amount of tonnage, especially given the poor outlook.
“Contracting activity has been quick to feel the effects of the pandemic with owners and investors showing little appetite for new ships,” said BIMCO chief shipping analyst Peter Sand.
In the tanker sector, industry has also recorded a fall in its orderbooks, though not as sharp as the falls in dry bulk and container shipping books. This is primarily because the tanker orderbook has been at a much lower level than that of dry bulk and containers in the past two decades. The orderbook for crude oil tankers stands at 36.3M dwt and for the oil product tanker fleet at 12.1M dwt, down 4.2% and 12% from 12 months ago, respectively.
In fact, product tankers is the only segment to have seen higher contracting this year than last, up 2.9% in the first seven months of the year at 3.2M dwt, though orders for new crude oil tankers have fallen 41.3% in the same period, a drop from 10.1M dwt last year to 5.9m dwt this year.
Deliveries have fallen by 39.1% for crude oil tankers and 46.1% for oil product tankers while total tanker deliveries so far this year have amounted to 10.1M dwt, compared to 17.2m in the same months last year.
Deletions from the crude oil tanker fleet have almost come to a stop. Only two crude oil tankers have been demolished in the first seven months of the year, both Suezmaxes. This has translated into a 77.1% drop in crude oil tanker demolitions compared with the same period last year, coming in at only 374,643 dwt.
Conversely, BIMCO notes demolitions of product tankers have risen. Up 10.9% between January and July compared to last year, eight product tankers have been demolished totalling 0.5m dwt.
This will not be enough to slow the rise in the crude oil and oil product tanker fleets, which have experienced the next highest fleet growth of the four, at 2% and 1.7% respectively.
Referring to the global fleet, Mr Sand said: “The continued increase in the supply of ships, despite higher demolitions and lower contracting, cannot be ignored as the volume of world trade is set for a considerable drop this year, and not forecasted to return to pre-pandemic levels until at least 2022. While the decline in contracting will result in slowing fleet growth in the coming years, balance in the shipping markets may prove elusive for many years to come.”
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