Page 10: of Maritime Reporter Magazine (December 1989)

FORECAST 2000

WORLD SHIPBUILDING

A MARKET POISED FOR RAPID TAKE-OFF

AND SUSTAINED GROWTH

Editor's note: This article pertains to commercial shipbuilding. Details of the U.S.

Navy shipbuilding program, which includes the construction of 90 vessels and three major conversions over the next five years, are highlighted in Mr. McCaul's article, "Status Report on Navy Shipbuilding and

Repair," in the Naval Technology & Ship- building supplement in this issue.

The past 15 years have been diffi- cult times for many shipbuilders and marine equipment manufactur- ers. Massive overbuilding of inter- nationally trading ships in the early 1970s and dramatic structural changes in the flow of international trade combined to make a very de- pressed situation. Many marine firms throughout the world have been unable to weather this eco- nomic storm. This difficult period, however, is coming to an abrupt end. A business turnaround is oc- curring in major shipping sectors and aging ships present a massive fleet replacement requirement. In fact, as will be discussed below, the take-off in worldwide ship construc- tion has already begun.

Ignoring usual short term cyclical movements, long term business con- ditions in the two major marine sec- tors—tankers and dry cargo ship- ping—have dramatically improved over the past several years.

World trade in oil has been grow- ing since the mid-1980s. OPEC pro- duction during the first eight months of 1989 was 14 percent high- er than the corresponding period last year—and more than 50 percent higher than production in the mid- 1980s. The world oil trade has grown from about 24 million barrels per day (MBD) in 1985 to more than 30

MBD in 1989.

As a result, tanker charter rates have climbed and resale prices of secondhand tankers have soared.

For example, a 350,000-dwt VLCC built in the mid-1970s would bring a price of $42 million today. Just one year ago, its resale price would have been $24 million. Five years back the ship was worth $6 million. Spec- ulators have made vast killings in this market—including the Loews

Group who is understood to be dis- cussing sale of 50 percent interest in six 12- to 15-year-old ULCCs now valued at $300 million.

Rates in the bulk carrier markets have also improved over the past several years. One year time chart- ers are fetching rates which double or triple those in the mid-1980s.

By James R. McCaul

IMA Associates, Inc., Washington, D.C.

ALL SHIPS IN THE WORLD ORDER BOOK

AT THE END OF THE SECOND QUARTER, 1989

Under Construction Not Commenced TOTAL

Where Building Percentage

Gross Gross Gross of World Deadweight

No. Tonnage No. Tonnage No. Tonnage Tonnage Tonnage

Argentina 19 68,503 11 23,979 30 92,482 0.34 140,241

Australia 25 22,638 7 5,409 32 28,047 0.10 22,033

Bangladesh 3 950 2 825 5 1,775 0.01 1,050

Belgium 5 78,000 1 20,000 6 98,000 0.36 97,000

Brazil 32 690,290 14 324,500 46 1,014,790 3.71 1,626,109

Bulgaria 5 65,434 16 152,346 21 217,780 0.80 335,390

Canada 7 30,016 2 1,400 9 31,416 0.11 4,695

Chile 7 2,400 5 2,150 12 4,550 0.02 28 •China, People's Republic of 25 283,719 52 578,457 77 862,176 3.15 1,292,915

China, Republic of (Taiwan) 7 426,500 10 592,800 17 1,019,300 3.73 1,785,490

Colombia 1 207 1 207 327

Denmark 23 168,686 38 608,227 61 776,913 2.84 956,147

Egypt 7 24,177 1 9,329 8 33,506 0.12 33,600

Finland 22 454,877 7 141,215 29 596,092 2.18 115,366

France 19 106,877 14 104,419 33 211,296 0.77 72,624 "German Democratic Republic 1 11,977 50 530,000 51 541,977 1.98 446,862

Germany, Federal Republic of 50 537,127 24 270,399 74 807,526 2.95 812,030

Greece 28 39,455 4 12,780 32 52,235 0.19 56,981

Guatemala 1 130 1 130

Iceland 1 143 1 200 2 343 100

India 62 172,099 12 106,860 74 278,959 1.02 426,118

Indonesia 15 16,884 2 7,000 17 23,884 0.09 23,270

Iran 3 2,874 1 200 4 3,074 0.01

Israel 1 492 1 492

Italy 69 608,349 10 177,000 79 785,349 2.87 788,103

Japan 224 3,779,147 200 4,018,714 424 7,797,861 28.53 11,556,401

Korea (South) 62 2,264,265 108 4,254,100 170 6,518,365 23.84 11,448,664

Lebanon 1 300 1 300

Malaysia 4 4,000 2 19,000 6 23,000 0.08 39,350

Malta 8 28,200 8 28,200 0.10 53,920

Mexico 25 49,984 39 19,813 64 69,797 0.26 94,254

Morocco 2 755 2 600 4 1,355

Netherlands 65 118,006 36 107,212 101 225,218 0.82 271,008

Norway 20 23,918 23 70,550 43 94,468 0.35 108,333

Pakistan 2 11,150 2 11,150 0.04 17,550

Peru 33 15,071 33 15,071 0.06 5,400

Poland 63 380,575 91 608,554 154 989,129 3.62 1,273,894

Portugal 41 76,568 6 8,946 47 85,514 0.31 120,976 "Romania 3 89,818 32 490,264 35 580,082 2.12 892,090

Singapore 15 29,208 9 19,980 24 49,188 0.18 59,551

Spain 124 462,930 89 752,794 213 1,215,724 4.45 1,856,618

Sri Lanka 1 350 1 350

Sweden 15 24,314 3 24,250 18 48,564 0.18 19,980

Thailand 1 2,500 1 2,500 0.01

Turkey 22 80,349 19 144,700 41 225,049 0.82 352,950 •U.S.S.R. 1 18,526 4 115,250 5 133,776 0.49 221,970

United Arab Emirates 3 1,147 3 1,147 1,670

United Kingdom 40 197,313 9 55,946 49 253,259 0.93 273,741

United States of America 52 26,671 64 15,078 116 41,749 0.15 46,250

Venezuela 6 650 6 650 200

Yemen, People's Democratic Republic of 1 144 1 144 250

Yugoslavia 36 801,806 27 640,820 63 1,442,626 5.28 2,308,667

WORLD TOTAL 1,307 12,300,339 1,048 15,036,196 2,355 27,336,535 100.00 40,060,166

Source: Lloyd's Register Merchant Shipbuilding Returns "Information Incomplete 12 Maritime Reporter/Engineering News