French orders to foreign shipyards

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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
Quarterly orders in gross tonnage (millions) South Western Japon Korea China Europe 1997 March 3.875 2.585 0.500 1.001 June 2.905 3.728 0.283 1.129 September 2.757 3.533 0.235 0.394 December 5.824 3.887 0.443 0.925 1998 March 2.238 1.379 0.245 1.585 June 2.648 1.741 0.241 1.040 September 3.875 2.801 0.053 1.085 December 2.219 2.898 0.122 0.346 1999 March 1.837 1.345 0.317 0.513 June 1.809 2.877 0.601 0.705 September 2.265 3.199 1.400 0.733 % growth:1-2-3 Qtr. 98/99 -33 % 25 % 330 % -47 % The drop in orders was also unbalanced in as much as it essentially affected, in the conventional vessel category, both Aframax and VLCC tankers, although Suezmax carriers to a lesser extent too. Thus the percentage of vessels on order compared to the trading fleet fell. Very low freight volumes this year seemed to have braked the renewal of the tanker fleet that began in 1997. On the contrary, bulkers, from Handymax to Capesize vessels, and containerships were being rejuvenated. Bulker orders were probably more speculative this year. Owners seeking economies of scale, to maintain or increase market share or to take advantage of low construction prices spurred new orders for containerships of ever-increasing size. 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Dwt 31 ships 24 Source: Lloyd’s Register Many orders came from German owners who wanted to take advantage of favourable tax regulations that might disappear. Specialised tonnage, inherently less speculative, was much more strongly affected by the drop in orders, with the exception of ro-ro vessels, LNG carriers and cruiseships. Cruise companies once again invested massively, but on an even greater scale than last year. The four major European shipyards that specialise in building cruiseships have an overall work load lasting through 2003, not including optional vessels. The craze for orders has resulted in such a bottleneck in producing these vessels that owners must place orders with less experienced shipyards or ones whose experience dates back a very long time, like Ingalls in the US. The cruise business does closely look like the tourism industry, where supply can create intense demand. However, in shipping industry, an excess of vessels has not contributed yet to increase the volumes carried. In 1998, the drop of the Korean won against the dollar, coupled with a feeling of economic uncertainty, brought on a fall of 15 to 30% in the price of standard vessels. This slide continued into the beginning of 1999. However, this is difficult to quantify because, as usual, supply in ship construction is heterogeneous and the requirements of shipyards were widely varied. Remember, at the end of 1998, Japan and Korea each gained around 10 million gt of orders, and about 20 million gt remaining in each of their orderbook. In general, shipbuilders in these two countries had no reason to support further cuts, especially since the won and the yen both appreciated in the last quarter. Vessel contracting 1998-1999 (up to December 15, 1999) 20 18 1998 up to 15/12/99 34 VLCC Suezmax Aframax 10 15 16 MR product tankers 29 41 60 102 154 146 Capesize Panamax Containerships (above 1,000 teu) T h e s h i p b u i l d i n g m a r k e t S H I P P I N G A N D S H I P B U I L D I N G M A R K E T S 2 0 0 0 7
Page 3 and 4: Bad and good reasons ? At the end o
Page 5: The shipbuilding market in 1999 The
Page 9 and 10: In contrast, most Chinese shipyards
Page 11 and 12: As an example, production costs for
Page 13 and 14: China As it was the case last year,
Page 15 and 16: 10 9.5 9 8.5 8 7.5 7 The European C
Page 17 and 18: The Asian challenge is clearly felt
Page 19 and 20: Norway Norwegian shipyards, which a
Page 21 and 22: The cruise market in 1999 1998 was
Page 23 and 24: success. Carnival tried in vain to
Page 25 and 26: European sector. Very few second-ha
Page 27 and 28: The containership market in 1999 Br
Page 29 and 30: (before absorption), Evergreen, P&O
Page 31 and 32: Teu 300,000 250,000 200,000 150,000
Page 33 and 34: 4,000-4,999 teu 17% 3,000-3,999 teu
Page 35 and 36: The reefership market in 1999 Anoth
Page 37 and 38: The spot market Compared to 1998, t
Page 39 and 40: concluded until very late. • Expo
Page 41 and 42: The dry bulk market in 1999 The pes
Page 43 and 44: 14 12 10 8 6 4 2 0 Jan 96 US$/tonne
Page 45 and 46: US$/day 15,000 13,000 11,000 9,000
Page 47 and 48: older ladies in the 15 years-old br
Page 49 and 50: The tanker market in 1999 Crude •
Page 51 and 52: 15% At the same time, youth in the
Page 53 and 54: for us just how stagnant this marke
Page 55 and 56: their specifications and their SBT
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Dwt 12,000,000 10,000,000 8,000,000
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The chemical carrier market in 1999
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the previous year. Deliveries for t
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There are two corollaries to this.
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The liquefied petroleum gas shippin
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We believe that further consolidati
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In this respect, the Chevron/Dynegy
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Perceptions As mentioned, the conso
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The liquefied natural gas shipping
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In Malaysia, the Japanese market wi
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The offshore market in 1999 Allow u
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The oil-drilling world also acknowl
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35,000 30,000 25,000 20,000 15,000
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The fishing vessel market in 1999 D
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45,000 40,000 35,000 30,000 25,000
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The marine insurance markets in 199
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of future resources in order to mee
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French shipyards deliveries and ord
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Chantiers Piriou • Ships delivere
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French orders to foreign shipyards
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• Samsung (South Korea) FDS 2000
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French orders to foreign shipyards

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