French orders to foreign shipyards

6
World
orderbook
since 1990
in gross
tonnage
(millions)
it was at 57.7 million gt in the third quarter of 1998.
This level is nonetheless the third highest of the decade.
Economic projections for early 1999 did not provide any
grounds for encouragement. International Monetary Fund
(IMF) growth forecasts in September 1998 for the years
1999 and 2000 were again lowered in April 1999:
IMF Forecast (as % of GDP)
1999
World United States Japan Europe
1998 September 2.5 2.0 0.5 2.8
1999 April 2.3 3.3 -1.4 2.0
1999 September 3.0 3.7 1.0 2.1
2000
World United States Japan Europe
1999 April 3.4 2.2 0.3 2.9
1999 September 3.5 2.6 1.5 2.8
The Asian crisis reduced increases in trade volume to 4%
in 1998 and 1999 compared to 10.5% in 1997, while
the rate of deliveries of new ships rose.
Freight rates in the three major shipping segments, oil
tankers, dry bulk and containership transport, continued
to fall. There was little optimism about the industry and
greatly reduced newbuilding prices did not exert the
attraction on shipowners that it did last year. Owners
were beginning to wonder how long the crisis would last.
First quarter orders for 1999 were so low that the year
began with a spectacular plunge of 10% in the world
orderbook that reached a level of 53.8 million gt in March.
These gloomy prospects, coupled with continued weak
demand, led some shipyards to pursue a more aggressive
sales policy after April, cutting prices further and proclaiming
it throughout the industry. Japanese, Korean and
Chinese shipyards specialising in Handymax and
Panamax bulk carrier construction pursued this course of
action. They were followed shortly by others and many
owners, especially in the Greek shipping community,
placed orders, certainly more for opportunism than for
increases in revenue.
At the same time, prices on the second-hand market for
these ships, after undergoing a devastating plunge,
firmed up considerably. This renewed interest reversed
the trend and stabilised the second quarter world orderbook
at its first quarter level.
This activity was to continue through the summer and
was amplified by a certain firming of prices, especially in
the dry bulk sector, which instilled in owners a feeling of
urgency to take advantage of low newbuilding prices,
perhaps for the last time. However, other factors such as
improvements in economic data, increases in demand
and the need to maintain market share impelled owners
to invest, especially in large containerships and in new
cruiseships.
The reduction in the overall pace of orders observed over
the first three quarters of the year was very unbalanced
compared to the same period one year earlier, depending
on the region of construction. While Europe underwent
a 50% drop in orders and Japan’s slide was 30%, Korea
and China both recorded solid increases, with Korean
shipyards augmenting orders by 25% and Chinese
shipyards tripling their levels.
South Western Eastern Rest of
Korea Japan China Europe Europe the world Total
end 1990 8.7 13.5 1.1 8.3 4.4 4.2 40.4
end 1991 7.8 14.9 1.4 9.2 3.8 3.2 40.3
end 1992 7.9 14.4 2.0 8.4 4.4 3.3 40.4
end 1993 8.6 11.1 2.0 8.1 4.5 2.1 36.4
end 1994 10.9 13.1 1.9 8.2 5.2 2.6 41.9
end 1995 13.9 13.7 2.0 8.2 5.9 2.6 46.1
end 1996 13.2 13.7 2.7 8.3 4.8 2.6 45.3
end 1997 18.7 19.8 3.2 8.0 3.6 1.6 56.6
1998 (September) 18.9 20.1 2.6 9.4 4.0 2.7 57.7
1998 (December) 20.2 19.6 2.3 8.5 3.8 2.9 57.3
1999 (March) 18.8 17.5 2.4 8.3 3.8 3.0 53.8
1999 (June) 18.9 17.4 2.8 8.2 3.6 2.9 53.8
1999 (September) 19.7 17.3 3.7 8.0 3.8 2.6 55.1
Source: Lloyd’s Register