Chinese shipbuilding decline

Gary Li, senior maritime analyst, IHS, used the example of COSCO, one of the country’s largest shipping companies which is currently suffering huge losses and looks unlikely to continue ordering as many ships as before.

He said that the factors affecting the Chinese market are numerous and that some are pegged to market forces and others to policy.

“In the past few years China has been adding to the global container oversupply by taking on large orders, even when there was a clear slowing down in the sector”, he said.

Mr Li pointed out that despite there being around 576,000teu worth of capacity on order for delivery in 2013 (twice as much as 2012), many foreign ship owners are now wary of ordering ships from China because of contractual problems including late delivery.

Orders for bulk carriers reached a peak in 2012 with 625 ships, up from 66 in 2006, and orders currently stand at 570 for 2013.

Mr Li says that it’s highly unlikely that the age of cheap bulk carrier manufacturing will return now to Chinese yards.

This is because China is also losing its competitiveness to its neighbours South Korea and Japan. He added that the lack of advanced designs is forcing operators to turn to South Korea as emission restrictions are being imposed.

Japan’s depreciating Yen has increased its competitiveness. Japananese yards have managed to increase their competitiveness by moving towards building offshore vessels and platforms to tide them over the down period.