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Shipbuilding surge – ‘We have been here before’Shipbuilding surge – ‘We have been here before’

The highest level of newbuilding orders since 2007, Chinese dominance, and new yard capacity being developing, these are frenetic times in the world of shipbuilding.

Marcus Hand, Editor

January 17, 2025

11 Min Listen

In the fifth, and final, part of our shipping market outlook series we are focusing on the shipbuilding sector with Maritime Strategies International (MSI) Managing Director Adam Kent.

Speaking to the Seatrade Maritime Podcast he says, “Newbuilding contracting in 2024 was exceptional. It's probably going to go down as the second highest ever year of contracting with around 125 million gross tonnage ordered over the course of 12 months.” In 2007 there were some 170 million gt of ships contracted.

You can listen to the full interview as a podcast in the player above

“It's higher than any other year we've seen in the last decade by around 25% and is more than double the average contracting that we saw over the, last ten years.”

A lot of strength in the market was generated by the container sector, but there was also a remarkable surge in tanker orders to 60 million gt this compares to just 10 million contracted in 2022.

There were also record orders for LPG carriers with 75% focused around the VLAC (very large ammonia carrier) and VLGC segments. “I think there's been a lot of interest in the potential for new trades associated with ammonia that's helped drive that sector and that ordering,” Kent says.

He draws a comparison with the period from 2003 – 2007. “We seem to be in that sort of period over the course of the last three or four years where consistently one sector is sort of topping out at all-time record contracting levels.”

Related:Hengli Heavy Industry launches shipbuilding 'future factory'

Will the same level of contracting continue in 2025?

In short, the answer from Kent is “no”.

MSI had forecast that a lot of the vessels that were contracted in 2024 would be ordered over the next two – three years, so they believe there has been a frontloading of the orderbook.

“As a consequence, we do expect to see order totals come off, during the course of 2025 and 2026 for that matter. That's not to say there's going to be no ordering in this year.”

MSI expects some orders for smaller container ships but says we are coming to the end of a binge in ordering boxships.

“When it comes to dry bulk, given if you look at the age profile of the fleet, there will need to be a wholesale, or almost wholesale, replacement of the dry bulk fleet potentially, for the vessels over that are over now, the 19, 20 years old over the course of the next five years,” he says.

The dominance of Chinese yards – where does it leave Japanese and Korean builders?

Chinese yards secured two-thirds of all orders in 2024 in gross tonnage terms and the orderbook stands at an “impressive” 151 million gt.

“If you compare that to Korea, the Korean orderbook has fallen marginally over the course of the last 12 months and the Japanese, orderbook has fallen by around 4 million gt. So, China is certainly winning the current battle to secure orders,” Kent says.

He notes that the Chinese yards have moved very quickly up the value curve. “The Korean yards and the Korean government are now investing quite heavily in new technology and productivity gains to try and keep ahead of the Chinese yards in the high value sectors predominantly sort of the container sector and the gas sector. it probably has to do a little bit more to try and wrestle back some of those container orders that have been lost to China over the course of the last few years.”

For Japanese yards niche sectors that developing such as CO2 carriers are seen as potential way forward.

Reactivated and new Chinese yard capacity – will there be overcapacity in years to come?

“We have been here before…we've seen a lot of mothballed yards come back to life over the course of the last three years,” Kent says.

“Perhaps more worryingly from a long-term perspective we've seen now some new yards starting to be constructed and greenfield yards starting to be constructed in China.”

The introduction of new capacity is seen as risk going forward even if it has upsides at present. “Obviously it's great at the minute when if you're an owner wanting to go place an order, it means that you've got more variety, you've got more options to place orders and there is a chance of getting your vessel quicker and potentially at a slightly lower price than if you were just relying on the shipyard capacity that was in existence say two, three years ago.”

However, contracting will not continue at current levels in coming years and when the number of orders drop yards will start to become more competitive on pricing.

“So good for the short term if you're an owner, bad in the longer term for new building prices, which again may be a good thing if you're a ship owner looking to order in three or four years,” Kent says.

About the Author

Marcus Hand

Editor

Marcus Hand is the editor of Seatrade Maritime News and a dedicated maritime journalist with over two decades of experience covering the shipping industry in Asia.

Marcus is also an experienced industry commentator and has chaired many conferences and round tables. Before joining Seatrade at the beginning of 2010, Marcus worked for the shipping industry journal Lloyd's List for a decade and before that the Singapore Business Times covering shipping and aviation.

In November 2022, Marcus was announced as a member of the Board of Advisors to the Singapore Journal of Maritime Talent and Technology (SJMTT) to help bring together thought leadership around the key areas of talent and technology.

Marcus is the founder of the Seatrade Maritime Podcast that delivers commentary, opinions and conversations on shipping's most important topics.

Conferences & Webinars

Marcus Hand regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

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