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European shipbuilding industry hit hard by the "epidemic", forecast no orders for the next three years

European shipbuilding industry hit hard by the "epidemic", forecast no orders for the next three years

Column:Industry News    Date:2021/2/19 8:29:23    Viewed:

From the outbreak of the epidemic before 4 years to receive more than 500 billion orders to the next 3 years may face zero orders, the European shipbuilding industry was hit hard by the "epidemic". Relying on the cruise market and the re-emergence of the European shipping companies also because of the cruise market "freeze" and fall into the abyss.

From 2020 onwards, the new crown epidemic makes the shipowner's interest in new ship investment weakened, which for the shipbuilding industry is originally plagued by overcapacity, weak demand and stagnant world trade growth and other problems is undoubtedly worse, and the European shipbuilding industry in the current round of the crisis was hit more seriously.

In the four years before the outbreak, the European shipbuilding industry has been performing well, because European shipbuilders mainly focus on building high-end and high-value cruise ships and passenger ships, and this market continued to boom in the previous four years, during which European shipbuilders have accumulated more than $ 80 billion of passenger ship orders.

However, with the epidemic hitting the tourism industry, resulting in the complete suspension of cruise ships, cruise lines have suffered significant losses, and the European shipbuilding industry is facing a huge order gap brought about by the decline of the cruise industry. Reinhard Luken, managing director of the German Association of Shipbuilding and Marine Industries (VSM), predicts that orders for passenger ships such as cruise ships could fall to zero from 2020 until 2023, and that "the road ahead is extremely different and there will be no more large orders in this sector". Luken said. "We need to find the right solution in the next few years to bring our leading cruise ship construction technology to other markets. Europe has some of the most advanced shipyards in the world and is far more efficient than its Asian competitors. And leading the way in cruise ship construction technology is key to the future of European shipbuilders.

Kjersti Kleven, chairman of the European Shipbuilding and Marine Equipment Association (SEA Europe), said the global shipbuilding industry saw a 62 percent year-on-year decline in orders by tonnage and more than 70 percent by value in the first half of 2020 compared to 2019, a trend that continued throughout the year. This downturn in orders is set to continue until market conditions improve and confidence in market returns increases, especially in Europe.

"As in other industries, shipbuilders and equipment companies are facing serious challenges in terms of production, with many having to shut down production. Some shipyards and equipment companies are facing liquidity problems due to delayed investments by shipowners. In addition, until now there were many overseas workers who could not return to work because of the border blockade, a situation similar to seafarers but to a different extent."

Kleven believes the outbreak has put further pressure on Europe's ability to maintain a strong maritime technology sector. "We are seeing a lot of layoffs already happening in 2020, and the number of layoffs is expected to increase this year and beyond. We all know that layoffs can have a negative impact on the industry's expertise and skills at a time when we are really looking for new talent and investing in new skills to address the green and digital transformation."

John McDonald, senior vice president of American Bureau of Shipping, said that with the shrinking market for offshore rigs, European shipbuilders could focus further on the offshore wind market. Overall, the majority of current newbuilding orders are for conventionally powered vessels, but with the gradual tightening of environmental regulations and rules, shipowners are increasingly focusing on the green ship sector.

Martin Stopford, CEO of Clarkson Research, also said that the shipbuilding industry is facing a huge order gap. This year's global shipyard deliveries are about 80 million dwt, while next year's deliveries will drop to 55 million dwt based on existing orders. Globally, Chinese shipyards still rank first in terms of orders in hand, with about 11 million CGT, followed by Korean shipyards with about 9 million CGT and Japan with about 6 million CGT.

Stopford noted: "Against that backdrop, you can expect ship prices to fall, but they only fell by 4% last year, which is quite strong, and newbuilding prices retreated by 3%. So we're not seeing the kind of price collapse we saw in the 1980s, when prices fell by 30-40 percent in a few years. One of the reasons for that is that shipowners are not worried about prices, they are worried about ordering a ship that won't be obsolete in 10 years, and that is a major issue."

"I think that shipbuilding is a growth industry in terms of the needs of the industry as a whole. However, we need digital ergonomics to enable ships to meet targets in the performance area, logistics and carbon emissions."

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