Presentation Mr. Stopford

Report
SMM Press Conference
8th Sept 2014
World Shipbuilding
Dr Professor Martin Stopford
Managing Director, Clarkson Research
CLARKSON RESEARCH SERVICES LTD
Shipyards
surviving
better than
expected
1.
2.
3.
4.
5.
6.
Shipping Market Trends
World Economy & Ship Demand
Newbuilding Contracts & Future Supply
Shipyard Capacity & Orderbook
Regional Shipbuilding Trends
Energy, Environment & Innovation
“This is turning into a long shipping recession. Meanwhile the increase in fuel costs
and regulatory standards presents the biggest technical challenge for fifty years”
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Recession now
in year 6 and still
searching for
light at the end
of the tunnel
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Chart 1: Shipping Market Earnings 1993-2014
50
2008
$50,000/day
Earnings are NOT adjusted for inflation
2004
$39,000/day
45
35
2000
$24,000/
day
30
25
$27,178/day
20
15
$12,145/day
$12,000/day
10
$8,500/day
5
2013
2011
2009
2007
2005
2003
2001
1999
1997
1995
0
1993
Clarksea Index $000/day
40
(Clarksea Index shows weighted average earnings of tankers, bulkers, containerships & gas.)
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Chart 2: Growth of Trade & Cargo Fleet
Shows the “rolling” 7 Year Increase in trade & fleet
60%
% Growth sea trade over 7 years
% growth of cargo fleet over last 7 years
50%
World Fleet
grows faster
than trade
40%
30%
20%
10%
Fleet grows slower than trade
Sea trade
steady at 4%
growth
0%
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
% increase over last 7 years
70%
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Chart 3: “Shadow” Surplus & Laid Up Tonnage
Shadow surplus
Tankers laid up
Bulkers laid up
2011
2006
2001
1996
1991
1986
1981
1976
“Shadow”
surplus is
soaked up by
slow steaming
today
1971
1966
“Shadow”
Surplus –
tonnage in
excess of the
dwt of ships
needed to
carry trade at
full speed
1961
7a
250
240
230
220
210
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
1956
M dwt
Shows “Shadow” surplus tonnage and the proportion laid up
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Collapse of Thai
baht sparked
Asia Crisis
Dot.com crisis
- millionaire for
a day
Are these
sovereign
bonds for the
bin, pal?
Middle East
crisis, Lehman
Mark 2, China
problems???
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Chart 4: World GDP & Sea Trade Growth
% change
Credit
Crisis
Oil Crisis
1991
Financial
Crisis
1997
Asia
Crisis
The sea
trade
growth
trend is
3.8% pa
2001
Dot.com
crisis
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
World GDP (red line) and sea trade (blue line)
Crisis 1 Crisis 2
1973
1979
1st Oil
2nd Oil
Crisis
Crisis
Crisis 6
2007
Credit
Crisis
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I made millions
ordering
against
timecharters
2
I should never
have ordered
those bulkers
I ‘ve really
gone off
ordering ships
I LOVE
ordering
new ships
One of those
nice shipyards
arranged some
credit, sir
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Orders
Orders in 2013 for
169.7m dwt was
the 3rd highest
ever!
240
220
200
180
160
140
120
100
80
60
40
20
0
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
MillionDWT Deliveries
Chart 5: Shipbuilding Orders 1963-2014
15
Source Maritime Economics 3rd Ed Martin Stopford (Updated August 2012)
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Chart 6: Top Ten Shipping Investors
First half 2014 by Investor Country of Domicile
$ billion orders 1st half 2014
5
10
0
Greece
China
Japan
Germany
Singapore
USA
Italy
Norway
UK
S Korea
15
7.3
6.0
2.9
2.9
2.8
2.3
2.3
2.2
1.1
1.1
N America
8%
Other
4%
Europe
48%
Asia
40%
Contracts $39.9 bn 1st half 2014
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The shipyards are
winding down from the
biggest boom ever, but
sales still active and
volatile . Marine
equipment sales about
$70 bn in 2013, up 30%
from $53 bn in 2012
Marine equipment market busy with eco-ships
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Chart 7: The Shipbuilding Cycle
Shipyards adjust capacity downwards after 2000s boom
Million Dwt
In 2010
deliveries
peaked at
169m dwt
2013 Deliveries m dwt
180
160
140
120
100
80
60
40
20
0
Other, 5.6,
5%
Offshore,
2.2, 2%
Tankers,
21.4, 20%
Forecast
106 m dwt
in 2015
Containers,
15.9, 15%
Bulkers,
62.8, 58%
2015
2011
2007
2003
1999
1995
1991
1987
1983
1979
Demolition
1975
1971
1967
1963
Deliveries
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1200
1100
1000
900
800
700
600
500
400
300
200
100
0
1123
983
907
677
637 618 625
664
696
759
1168
1098
1020
918
808
696
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Number of Yards
Chart 8: Number of Active Shipyards
Source: Clarkson Research
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240
220
200
180
160
140
120
100
80
60
40
20
0
Average
yard
produces
50% more
than in 2009
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Yard Output Index
Chart 9: Average Yard Output 1998-2013
Source: Clarkson Research
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Chart 10: World Cargo Ship Demolition
Shows the demolition (bars) on left axis & % fleet demolished on right
Million Dwt
70
% fleet
% cargo fleet
scrapped
(right axis)
60
8%
M Dwt
demolished
in year (left
axis)
50
7%
6%
5%
40
4%
30
3%
2012
2009
2006
2003
2000
1997
1994
1991
1988
0%
1985
0
1982
1%
1979
10
1976
2%
1973
20
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China and S
Korea “neck
& neck” for
top position
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Chart 11: Regional Shipbuilding Shares 1903-2013
See: page 616
100
other countries
% total ships launched
90
USA
China
80
70
Korea
60
50
40
Scandinavia
30
20
10
Europe
Source; Lloyds Register of Shipping, Clarkson Research
1903
1908
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
0
Britain
Japan
FIGURE 15.1 Shipbuilding market shares 1902-2013
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CGT
35.9%
GT
35.4%
CGT
33.8%
GT
35%
CGT
18.4%
GT
20.4%
GT
1.7%
Chart 12: 2013 Shipyard Output by Country
2013 Output by Country and Ship Type
Bulker Tanker
Builder
China P.R.
S. Korea
Japan
Philippines
Norway
Vietnam
Germany
Taiwan
USA
France
Other
Total
August 2014
M.CGT M.CGT
7.8
1.4
5.1
0.4
1.4
3.5
0.6
0.0
0.2
Container
ship
M.CGT
1.8
4.8
0.3
0.1
Gas
Offshore
Other
Total
M.CGT
M.CGT
M.CGT
M.CGT
0.2
1.6
0.3
0.9
0.7
0.1
1.1
0.5
0.6
0.0
0.0
0.0
0.3
0.0
13.3
12.5
6.8
0.6
0.4
0.3
0.3
0.3
0.2
0.2
2.2
37.0
0.3
0.1
0.0
0.0
0.3
0.0
0.1
15.1
0.3
5.8
0.2
0.1
7.3
0.0
2.1
1.0
3.2
0.2
0.6
3.5
www.clarksons.com
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19
• After 30 years of
technical stability
shipping faces
technical challenge
• The key issues are:_
– Bunker price
escalation
– Regulations & carbon
footprint
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Chart 13: Fuel Cost Versus Ship Cost
Ship cost: based on cost of new
Aframax tanker, including interest,
depreciation and OPEX,
Fuel cost: based of 49 tpd for 70,000
tonne cargo at 16 knots
12
Fuel cost
exceeds
ship cost
8
6
Fuel Cost
Ship Cost
4
Ship cost
exceeds
fuel cost
2
2013
2007
2001
1995
1989
1983
1977
1971
1965
1959
0
1953
cost $m per annum
10
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Chart 14: Fuel Consumption 60,000 dwt Bulkers
Fuel consumption
TPD at 14.5 knots
Oil price in
2013 $s
140
60
Bulkers
120 delivered in
2013 no
100 more fuel
efficient than
80
in 1986
Oil Priceat $2013 prices
Pre 2014 vessel service speed
Orderbook vessel's service speed
55
50
45
40
60
35
40
30
2016
2014
2012
2010
2008
2006
2004
1997
1994
1991
1988
1986
1984
1982
1980
1978
1976
1974
1972
0
1970
20
1968
20
1965
25
New
generation
ecoships
on way
Year of Build
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Chart 17: Conclusions
1. It's been a long recession, more like the 1990s in the 1980s. The fleet
is still growing too fast to allow trade to soak the surplus, so there is
still a way to go.
2. The shipbuilding market is very active, and orders in 2013 were the
2nd highest ever. Europe is still the biggest shipping investor, with a
44% market share.
3. The shipyards have cut output by about a third, but deliveries will
creep up again over the next 2 years.
4. China and Korea are vying for the top position and were "neck and
neck" in 2013, with 33-35% market shares.
5. Energy costs are a game changer, but shipping is a conservative
industry. The challenge is to embrace 21st-century technology. A little
progress has been made but there’s still along way to go.
6. •Change is vital and the new technology is on show at SMM. So enjoy
the exhibition and see how shipping is facing up to the challenge
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