While there remains potential for a new supercycle in the shipbuilding industry to replace the large number of vessels that were delivered between 2005 and 2010, broker BRS is warning shipbuilding prices will stall this year with the company’s chairman and CEO, Gilbert Walter, suggesting: “Shipyards will suffer from a slowdown in ordering, even as additional shipbuilding capacity comes on stream.”
Walter was writing in the introduction to BRS’s 173-page annual review, one of the best market reports in shipping, something he admitted delaying writing his editorial until the last moment before the review went to print, because predicting what lies ahead for the shipping markets, he wrote, has never been more difficult.
“Much like the start of 2025, the remainder of the year is shaping up to be just as unpredictable – a landscape ripe for asset play. Older ship values will continue to weaken, and shipbuilding prices will stall,” Walter suggested.
Regarding shipbuilding, BRS noted that in 2024, the average expected delivery time for available slots became more than four years.
Tight delivery slot supply saw previously inactive Chinese shipbuilding facilities to ramp up production.
“In 2024, China entered a new phase of shipbuilding expansion, almost 20 years after the boom that propelled it onto the international shipbuilding scene,” BRS noted, adding: “As China strengthens its grip on the global shipbuilding industry, several capacity expansions are planned or have recently taken place.”
New Chinese shipyards that have opened or reopened include Hubei Jinyu New Energy Shipbuilding, Three Waters New Energy Technology, Yangzhou Guoyu Shipbuilding, Jiangsu New Rongsheng Heavy Industry, Nantong Xiangyu (XMXYG), Jiangsu Soho Innovation & Technology Group , Wuhu Shipyard and Shandong Xinfa Group, while existing yards Yangzijiang Shipbuilding, New Times Shipbuilding, Hengli Heavy Industry,Jiangsu New Hantong Ship Heavy Industry, Huanghai and Yamic all expanded facilities. Existing yards Zhoushan Ning Shing Shipbuilding and Hubei Hechuang moved into the international space.
Once this new expansion is complete, BRS estimates it will add about 200 more ships per year to the current global shipbuilding capacity. This would increase the current capacity of about 1,500 ships to around 1,700 ships per year, and comes at a time when the US, which produced just five ocean-going merchant ships last year, is looking at penalising Chinese-built tonnage calling at American ports.
Currently, there are about 348 operational shipyards worldwide, having either secured new contracts or completed deliveries in the past year, according to BRS data. This is roughly 50% of 2007’s peak of around 700 active yards.
BRS argued that the shipbuilding industry entered a supercycle in 2021, equivalent to the 2003-08 boom.
“This theory, which we have defended for years, is based on the need to replace many of the units delivered as a consequence of the 2003-2008 boom, when annual global shipbuilding output went from 1,483 ships (2005) to 2,591 ships (2010). These vessels will reach 20-25 years of age this decade, and because they were designed and built before the eco-revolution of the 2010s, they need to be replaced with more efficient tonnage,” BRS explained.
A future threat to the shipbuilding industry is uncontrolled expansion, BRS warned, which could lead to market instability.
“Main engine manufacturers have increasingly become a bottleneck concerning delivery slots. A shipyard can lease all the facilities it desires to offer early slots, but no ship will be delivered without a main engine,” BRS noted.
BRS is predicting 100m dwt of ships will be ordered this year, down from last year’s 193m figure.
“We expect that current worldwide uncertainties will prevail, with a renewed pressure on freight markets delaying investment decisions. The new wave of shipbuilding expansion will have a downward impact on newbuilding prices, which should weaken during 2025 by more than 10% depending on type and size of ships, despite the resistance that will remain given the considerable orderbooks,” BRS predicted.
Newbuild prices remain elevated, however, according to data from rival Clarksons Research they have eased recently across sectors. Clarksons’ newbuilding price index has ticked down by 1% since the start of the year.
