Order cancellations hit 40%

The storm of order cancellations is sweeping over the global shipbuilding industry in the wake of the financial crisis, particularly in South Korea.

According to unofficial statistics from China Association of National Shipbuilding Industry (CANSI)’s Economic Research Center, newbuilding orders for a total of around 220 ships have been cancelled at South Korean shipbuilders including their overseas yards between the period of December 2008 and the beginning of May 2009, accounting for some 40% of the global order cancellations.

Half of the annulled orders were from the country’s nine large and midsize shipbuilders and the other half were at newly-established small and midsize yards.

Order cancellations for bulk carriers and containerships stood at 54% and 28% respectively of the total. Some shipowners could not pay advance payment due to financial crisis and credit crunch while, in other cases, shipyards could not secure refund guarantees from banks and contracts could not take effect and were ditched in the end.