Maritime Trade and Transport - HWWI

Breakdown of the world merchant
fleet by segment
Container
ships
Bulk goods
Fig. 5
Passenger
General ships
cargo
0.6%
10.3%
11.8%
36.3%
37.4%
Crude oil
tankers
3.6%
Special tankers
Other 0.9%
22.2%
Bulk goods
Source: ISL Bremen (2006a). Source: ISL Bremen (2006), VSM Annual Report 2005.
in the shipyard order books at the end of 2005. A doubling of orders on hand in the past three
years will ensure shipyard jobs until 2009. 7 These figures alone suggest that there is no reason
to worry about the future. Has shipbuilding become a growth industry?
But caution is advised! The current boom is not going to last long. History shows that shipbuilding
is a markedly cyclical industry. Boom phases are followed by relatively long slumps.
Cycle lengths vary between eight and twelve years – a little longer than the classic economic
cycle of six to nine years. In addition to world economics, the reinvestment cycle and charter
or cargo rates determine the amplitude and length of the shipbuilding cycle. 8 The tonnage
supply follows demand, depending on the type of ship, with a delay of 9-24 months. 9 As
ships have a lifespan of 20-30 years, it is easy to predict when they will need to be replaced. 10
This means that the current market situation is basically an echo of the past. At the same time,
its echo reverberates far into the future. We are thus likely to experience at least two cycles in
the next 25 years.
The cyclical nature of shipbuilding means an extremely variable workload at the shipyards
and highly fluctuating prices for new ships, depending on the market situation. At the same
time, shipbuilding as a sector lacks flexibility. Developing capacity requires much time and
considerable investments. According to the estimates, between three and five non-shipyard
jobs depend upon each job at the shipyard (multiplier effect). 11 This sector is of great strategic
significance, especially for developing countries. For this reason, there is an inclination to salvage
capacities that have been established through state subsidies in crisis periods. Painful adjustments
are politicized and implemented very slowly. The bottom line is that capacities are
more quickly increased than cut – so utilization under capacity is more likely in the long term
than a shortage of capacity.
7 See VSM (2006).
8 See Colton/Huntzinger (2002); Klovland (2004); First Marine International (2003).
9 Bulk freighters are generally the fastest to build, whereas up to two years must be planned for the construction of an LNG tanker.
Besides, sea transport generally follows economic development with a time lag, in the following order: Raw materials transports
(bulk goods), tanker trade, and finally container trade. See Hansa International Maritime Journal (2002a).
10 In the case of high cargo or charter rates, more ships are generally ordered; the time needed before delivery then tends to increase.
At the same time, there are usually fewer scrappings than would be assumed from the age of the ships. See Klovland (2004).
11 See First Marine International (2003).
92 Berenberg Bank · HWWI: Strategy 2030 · No. 4
Orders on hand in world shipbuilding
by type
Container
ships
Passenger
Cargo ships
ships 2.7%
7.8%
17.5%
26.8%
22.1%
Oil tankers
Special
tankers