Shipowners are paying the highest prices for new vessels since 2008 even as earnings fall on average.
Clarksons Research’s newbuilding price index has risen by more than a third since the start of 2021 — the highest level for nearly 15 years.
Analyst Trevor Crowe said this was due to increasingly limited yard slot availability and general inflationary pressures for shipbuilders, including labour costs.
The index is only 8% below the highest level on record back in August 2008, just before the onset of the global financial crisis.
A new VLCC is now priced at $128m, up 50% since the end of 2020.
A capesize will set a buyer back $64.5m, up 39%, while a 1,700-teu feeder boxship is now costing $29.5m, up 28% over the same period.
Crowe said adjusting for inflation provides additional perspective, with prices being the highest since 2012, but 30% below the 2008 peak.
But the researcher argues that “inflation” in the specification of ships being ordered is also a factor behind price trends over time.
He also noted yard prices are still rising as overall vessel earnings have eased back.
The newbuilding index is 10% above the 2022 average, while the company’s ClarkSea Index, covering rates across a range of key sectors, is down by 36% from 2022.
Boxships overpriced?
A new capesize costs the equivalent of 24 years of today’s earnings after typical operating expenses, compared to 12 years on average back in 2021.
The analyst argues that looking at secondhand prices is also relevant.
Five-year-old VLCCs are changing hands for 77% of the newbuilding price, which Crowe feels is close to parity.
“But in the container ship sector, newbuild prices look higher compared to secondhand,” he said.
A 2018-built, 9,000-teu vessel is priced at only 63% of a new unit.
“For shipowners pondering newbuild investment decisions, along with uncertainties around technology and timing, yard space and finance, today’s price environment is another complexity to consider,” Crowe said.
Clarksons reported more orders for ammonia-ready newcastlemaxes and LR1 tankers in China since the start of November, as well as general cargo ships in India.
Tanker contracting has picked up this year, with 261 vessels now ordered since the start of 2023 — double last year’s total.
