According to Clarksons, global newbuilding contracts so far in 2020 are 21.8m gt, a 47% year-on-year decline. The biggest reason for limited new orders is prolonged global economic recession, with rapidly shrinking economic activities in most areas such as private consumption, employment and investment, arisen from the shock including lockdown due to the Covid-19 pandemic.
After a year like no other, TradeWinds asked 40 shipping industry stakeholders what they see for 2021 after a year beset by the coronavirus, and how the pandemic will shape shipping's future.
The recovery of the market is also expected to be a long way from now as shipowners continue to take a wait-and-see position due to lower transportation demand and financial crunch caused by Covid-19. Consequently, this year’s newbuilding orders are expected to be the lowest since 2016.
However, the increasing tendency towards newbuilding investment is emerging slowly as hope for vaccine development and an economic recovery plan will boost the market sentiment.
In the coming years, we may be faced with various challenges at the hand of a lingering Covid-19 spread. The pandemic woes continue to restrict both international customers and our people to travel abroad and to have face-to-face meetings, thus limiting our sales activities. Under the circumstances where major exhibitions are cancelled or delayed, our opportunities for promotion and cooperation with valuable customers are fading.
However, we also expect some favourable opportunities to be created after Covid-19. It is expected that replacement demand for old ships will increase due to the recently strengthened maritime environmental regulations, such as the IMO’s decarbonisation initiatives. In this process, we are also expected to seek ways to use various future propulsion systems and alternative fuels such as LNG, LPG, biofuel and hydrogen in order to respond to new technology trends and environmental regulations such as zero-emission or autonomous ships.
In addition, Joe Biden’s victory in the US presidential election raises expectations for the recovery of shipping markets with clean energy.
It is clear that his main policies are aimed at reducing greenhouse gas emissions and, in turn, will accelerate the development of decarbonisation technologies and increase enquiries for further strengthened eco-friendly ships.
In order to cope with these challenges and opportunities, we make every effort to take pre-emptive actions to respond to the new environmental demand and new technology to be adopted in shipping and shipbuilding.
In addition, we will stand more ready for "untact" business activities, and put in extra effort to minimise the risk of our people’s exposure to the virus inside shipyards. In the pandemic era, we will direct all of our resources to develop and advance innovative technologies in the shipbuilding industry.
