Newbuilding orders may be 50% down on last year, but there is every reason to be cheerful for yards that can survive the crisis.
That is according to Stephen Gordon, the managing director at Clarksons Research.
Despite the depressing figures, Gordon said the shipbuilding industry is in a better condition to survive the downturn than in previous recessions.
After major consolidation, there are only one-third of yards actively working in shipbuilding compared to a decade ago.
He said yards have also performed well despite the production problems caused by the coronavirus.
“Shipyards have done a good job of managing output and finding delivery solutions through the Covid-19 disruption,” he said. "They are running at around 85% output of 2019 levels."
Yards have also geared their businesses to cope with the sort of downturn in ordering that has been prompted by the pandemic.
“There has been unprecedented disruption in the market, but shipbuilding is a business that has to cope with order droughts like the one we are experiencing now,” he said.
The orderbook, in relation to the size of the exiting trading fleet, is at a 30-year low.
That indicates ship supply will slow and trading markets should bounce back, which will result in more orders for yards.
“I think there is some short-term recovery potential, but orders could still stay at low levels for some time," Gordon said. "But it is in the medium to long-term, with fleet renewal and the industry’s emissions' target, where there is the most potential in the market.”
He insists green shipping is high on the agenda of those shipowners who are already planning their post Covid-19 investment strategies.
Gordon estimates something in the region of $1trn of newbuilding investment will be needed if shipping is to meet the goal of reducing emissions in line with the targets of the Paris Agreement on climate change.
He said the big question for the shipping industry will be over “timing and technology”.
Gordon believes pinpointing the timing of the investment, and choosing the right technology, will be key to the successful investments in green shipping.
However, it might take time for shipping’s major environmental newbuilding deals to come through for yards.
“These big environmental projects using alternative fuel can take time,” Gordon said.
