Newbuildings Order in 2016,2017 and 2018

Total newbuilding investments amounted to $58.7bn in 2017, Clarksons data showed. That was up 58% on year, just enough to keep the first-tier yards alive.

News ID: 78394

Date: 03 February 2018 - 14:49

According to MANA, but the annual figure was also the second-lowest this decade, reflecting shipowners’ resistance to creating additional capacity despite improved rate environments in several main sectors.

The cautious approach will limit fleet growth in many vessel classes in the next one or two years at least, leading to broad optimism in shipping.

Looking in more in detail, most orders were concentrated in large-sized segments, a large portion backed by long-term shipping contracts.

Capesize bulkers

2017: 75 ships, totalling 18.3m dwt, worth $4.1bn

2016: 35 ships, totalling 13m dwt, worth $2.8bn

Vale almost singlehandedly made this segment the most invested in 2017 with its shipping requirements.

The trend is likely to last as freight earnings are expected to stay healthy for at least one or two years, and Lloyd’s List Intelligence has predicted 30 orders for 200,000 dwt ships and 60 orders for 100,000 dwt-200,000 dwt vessels in 2018.

Very large crude carriers

2017: 48 ships, totalling 15m dwt, worth $3.9bn

2016: 14 ships, totalling 4.4m dwt, worth $1.2bn

Investors were keen to build more VLCCs as many analysts were predicting a shallow bottom in the current market down cycle, aided by some financiers holding similar views.

But the interest gradually died down throughout the year as freight earnings failed to meet expectations — in fact, a majority of the orders last year emerged in the January-June period.

With weakening market outlook, newbuilding investments are likely to fall in this segment this year. In addition, yards seem keener to fight for large-sized bulker business, as the newbuilding price of $80m or below for a VLCC offers little margin amid a firming steel price. LLI is predicting only 10 VLCC orders for 2018.

Containerships of 8,000 teu or above

2017: 29 ships, totalling 10.1m teu, worth $3.8bn

2016: 9 ships, totalling 9.3m dwt, worth $900m

This segment showed a rise in newbuilding investments mainly due to the resumption of ordering ultra large container vessels.

The outburst of newbuilding deals came last September, when CMA CGM booked nine 22,000 teu vessels and Mediterranean Shipping Co ordered 11 ships of that size.

The CMA CGM order was particularly noteworthy, as these newbuildings will mainly be fuelled by liquefied natural gas when delivered.

Those investments came against the background of a shrinking order book and improving market prospects on the back of optimistic global economic outlook, so don’t be surprised by more orders being placed in the coming quarters. LLI has forecast 25 post-panamax orders for 2018 and 33 in 2019.

Liquefied natural gas carriers of 140,000 cu m or above

2017: 13 ships, totalling 2.3m cu m, worth $2.7bn

2016: 8 ships, totalling 1.4m cu m, worth $1.8bn

LNG tankers of 140,000 cu m or larger remained one of the five most popular newbuilding types last year. But that was mainly due to the high newbuilding price tag in this segment — in fact, the 2017 tally, while higher on year, was the second lowest in the past seven years.

To yards’ dismay, even with booming global seaborne LNG trade and recovering freight rates, most owners were careful in not growing their orderbooks even as financiers had strong confidence in the segment.

That was mainly because the market is still absorbing the large number of newbuildings booked in 2014-2015. Based on LLI’s orderbook data, 52 LNG carriers totalling 379,000 cu m are due this year and 41 ships totalling 346,800 cu m in 2019.

Still, the growth of LNG trade is expected to be sustained for years, or even decades, with the global shift to cleaner technology.

Aframax crude carriers

2017: 54 ships, totalling 6.2m dwt, worth $2.4bn

2016: 18 ships, totalling 2.1m dwt, worth $800m

Not unlike its larger cousin VLCCs, the segment’s orders last year were driven by earlier confidence in crude tanker markets. As the year went on, ordering momentum gradually lost steam as rates underperformed.

Compared to other sizes of tankers, this segment has some advantages, however.

It requires smaller amounts of investments and caters to regional trades, so owners can try some experimental initiatives without taking on too much risk. Sovcomflot’s orders for LNG-fuelled ships is one example.

Moreover, US crude exports have continued to hit record highs since the export ban was lifted in 2015. With infrastructure for liftings by large tankers still being developed, aframaxes will disproportionally benefit from the emergence of the US as a crude-exporting powerhouse for the near term.

LLI has predicted only 25 orders.

Cruiseships

2017: 31 ships, totalling 3.2m cgt, worth $19.5bn

2016: 34 ships, totalling 2.8m cgt, worth $15.8m

For the second successive year, cruiseship investments exceeded all other segments.

Once again, a handful of European yards took the orders, as Asian players failed to enter this growing lucrative segment. Clarksons data showed 11 units were contracted at Fincantieri, five at STX France and seven between Meyer Turku and Meyer Werft.

The Cruise Lines International Association expects 27.2m passengers on board this year, up from 25.8m passengers in 2017.