Between the start of October 2008 and start of April 2013 the global orderbook declined 55% in CGT terms. Following this, the orderbook has grown 12% to 5,086 vessels of 108.0m CGT, as of 1st April 2014. This month’s Shipbuilding Focus looks at the size of the global orderbook and what this means for yards.

What’s on the Book?
As the line on the Graph of the Month shows, the orderbook grew strongly during the contracting boom. This was driven by buoyant ordering between 2005 and 2008, when an average of 65.6m CGT was contracted annually compared to 31.2m CGT between 2001 and 2004.

The orderbook peaked in 2008 at 11,671 vessels of 216.4m CGT. Following this, the orderbook fell to 96.5m CGT in April 2013. This was its lowest level since March 2005 and was a result of record output and relatively weaker ordering.

However, the orderbook has grown in recent months. This has been driven by relatively buoyant contracting, with 53.3m CGT ordered last year (up 109% y-o-y), combined with a 22% fall y-o-y in global output, with 36.9m CGT delivered.

Covering Up?
As a result of this, ‘forward cover’ rose for the first time since 2007. Forward cover is an indication of how much work yards have based on the number of months it would take to deliver the orderbook, according to the previous year’s output. Overall forward cover was 44 months at the start of the contracting boom in 2005; this grew to 67 months in 2008 before falling to 25 months in 2013. This was the lowest level on record. However, as of start year 2014, yards had 35 months’ work.

Covering the Big 3
As of the start of 2014, the big 3 builder nations, China, South Korea, and Japan, had all seen an increase in their forward cover. Chinese shipyards, whose forward cover dropped below their South Korean and Japanese counterparts as well as the global total in 2013, had the highest amount of forward cover at the start of 2014 with 38 months’ work. This is up 75% on start year 2013 and was supported by the apparent reining back of shipbuilding capacity in China, with Chinese output slowing 33% y-o-y in CGT terms in 2013.

Meanwhile, Korean yards who, at the start of 2013, had the largest amount of forward cover of the big 3 builder nations for the first time since 1999 (27 months), had 32 months’ forward cover, as of start year 2014. This is 18% up on 2013 but 17% lower than the amount of forward cover at Chinese yards.

With 30 months’ work, Japanese yards had a similar amount of forward cover to Korean yards at the start of 2014. Whilst yards in Japan and Korea have seen a relatively stable level of forward cover, forward cover at Chinese yards has been much more variable, peaking at 101 months at the start of 2008 before falling to 22 months in 2013.

So, after half a decade of decline the global orderbook has been increasing. Many yards have subsequently seen their forward cover increase. The pace of deliveries is projected to slow 2.4% to 36.0m CGT in full year 2014 and with relatively firm ordering in the year-to-date, it will be interesting to see how much forward cover shipyards have by the start of next year.

(Source: Clarksons)