Monday, July 22, 2013

Boxship Builders Picking Up the Pace?

Containership building is dominated by South Korean and Chinese shipyards, who together accounted for 86% of the capacity on order at the start of July. South Korean yards have contracts for 1.76m TEU, while Chinese yards have just over a million TEU on their orderbook. However, until now the two key building nations have been largely focused on distinct size sectors, and have displayed differing delivery performance versus schedule.
Size Sector Focus
The Graph of the Month shows that containership building has become increasingly dominated by South Korean and Chinese yards, with Japanese shipyards in particular losing market share. Generally, South Korean yards specialise in building large, technically advanced boxships. The average vessel size on order in South Korea is 11,174 TEU, while 76% of contracted vessels are of 8,000+ TEU. In May, Hyundai Heavy Industries in Ulsan took an order for a series of 18,400 TEU ships, while the first of Maersk's 18,270 TEU Triple E vessels has just been delivered by Daewoos Okpo shipyard.
In comparison, Chinese shipyards have thus far tended to focus on relatively smaller and simpler containership designs - the average size of boxship order in China is a significantly smaller 5,108 TEU. Just 27% of boxships on order in China are of 8,000+ TEU, compared to 49% of the overall containership order-book. In the very large size sectors, Chinese yards are reportedly keen to start contributing heavily, but without a proven track record of prompt delivery, they may find it difficult to compete with the well-established South Korean players.
Slippage Slipping?
Overall rates of non-delivery (comparing start year delivery schedules with actual deliveries) have been falling since 2009. However, rates differ significantly between countries. In the first half of 2013, South Korean yards have been delivering ahead of schedule, particularly in the larger sizes where they are dominant. Last year their rate of non-delivery was 14%, falling from 19% in 2011.
Meanwhile, so far this year, Chinese yards have a non-delivery rate of 33%, the same as in full year 2012, but a better performance than 2011 when less than half of their scheduled newbuild capacity hit the water. Globally just 67 boxships of 0.45m TEU remain on the order from pre-2009. As such, overall rates of non-delivery may well continue to fall.
The Impact on Supply
The fact that South Korean shipyards are delivering ahead of schedule so far in 2013, and that their orderbooks are dominated by very large capacity containerships, has had a significant impact on annual delivery projections, This is despite the stubbornly higher rate of non-delivery in China. The overall 2013 full year delivery forecast has been driven up to 1.55m TEU, which, if reached, would represent the largest ever year for containership deliveries.

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