Page 24: of Maritime Reporter Magazine (December 1997)

FAR EAST UPDATE

Power In Numbers

China — Propelled By low Employment Costs — leaps To No. 3 by Alan Thorpe, international editor

Far East Shipyard prices are on the move again. The scurry to place new contracts so far this year is good news for the world's princi- pal shipbuilders — at least in the short-run. The danger is that the volume of new contracting will encourage existing builders to "recommission" old resources — whether actual building docks or workers constructing ships — while new yards proceed with plans to commission new capacity.

Take a look at mainland China, for instance: Coming from almost nowhere in world terms a decade ago, China is now the world's third largest shipbuilder and is in third place on booking new orders.

Admittedly still a long way behind

Japan — with more than a third of global orders — and South Korea with a little more than a quarter,

China is a major new force in world ship construction which just might take the gloss off the biggest global orderbook most builders can remember.

The world's major builders have not been slow to see the writing on the wall. They have, after all, had a few hard lessons to learn over the last two decades. China has encouraged foreign shipbuilders such as Kawasaki Heavy

Industries (Jiangsu province),

Samsung Heavy Industries (Ningbo) and Hyundai Heavy

Industries (Dalian) to help it make a mark. It needs these foreign builders — as a seal of quality — but is still wrestling with yard pro- ductivity and quality. With a workforce costing about 1/12 of its peers, there must be a degree of comfort for those promoting

Chinese newbuildings on the inter- national market as well as some 24 very convincing arguments as to why ships should be built there.

Japan achieved a 39.3 percent share of new shipbuilding in 1996, completing 617 ships of 10,182,000 grt, according to a survey by the

Shipbuilders Association of Japan (SAJ). This reflected a 9.5 percent rise over the preceding year. South

Korea stayed in second position with a 28.5 percent share, complet- ing 188 vessels of 7,370,000 grt during the year. Germany was third with 4.6 percent, followed by

China with a 4.4 percent share.

Global completions totaled 283 bulkers of 9,805,000 grt; 162 tankers totaling 6,290,000 grt, 202 containerships of 4,689,000 grt and 57 LNG carriers comprising 1,078,000 grt.

Order levels for new ship con- struction received by Japanese shipyards returned to a more sta- ble level in August after the dra- matic rise in grt terms seen in the previous month. Japanese

Ministry of Transport statistics, which record orders for ships of 2,500 grt and over, reveal domestic yards secured contracts for 31 ves- sels of 778,000 grt in August com- pared with 42 ships of 2.025 mil- lion grt received in July. August's figure was 61.6 percent, or 11 ships of 1.25 million grt lower than

July's.

Meanwhile, boosted by orders for almost two million grt of newbuild- ings in September, South Korea's orderbook for the first nine months of this year is almost triple the fig- ure achieved in the corresponding period of 1996. Statistics from the

Korea Shipbuilders' Association indicate that domestic builders now command an orderbook of 8.72 million grt or 144 vessels. This compares with orders for 77 ships of 3.03 million grt secured in the first nine months of 1996.

Japan

Japan's NYK has placed orders with three Japanese shipbuilders for the construction of five 6,000 capacity car carriers in contracts estimated to be worth close to $300 million. Two of the five ships have been placed with Imabari, with scheduled delivery dates in July and October 1999. These will be followed by two from Shin

Kurushima Dockyard. Kanasashi

Shipbuilding, based in Shimizu, eastern Japan, is believed to have secured the contract for the fifth ship, with a delivery date of

October 1999.

NYK is also negotiating with

Oshima Shipbuilding for the possi- ble construction of two 77,000-dwt bulkers of a shallow draft configu- ration. The design will have a length of 738 ft. (225 m) and will feature a draft of 42 ft. (12.8 m).

This compares with a draft of 45.2 ft. (13.8 m) found on most conven- tional Panamax designs. The ves- sels' beam will also be significantly increased to 118 ft. (36 m).

London listed Ugland

International Holdings has exer- cised one of two options for a large vehicle carrier at Tsuneishi

Shipyard. The 6,100 car-carrying capacity ship will be an identical sistership to the newbuilding con- tracted with Tsuneishi in June this year. Contracted at a price of $54 million, the vessel has a scheduled delivery date of December 2000.

Ugland has until December this year to exercise the remaining option for a third similar car carri- er for delivery in 2000.

Contracts for five Handysize bulkers worth $100 million have been won by Mitsui Engineering and Shipbuilding (MES) from

Polska Zegluga Morska (Polish

Steamship Company) as part of a fleet renewal program. The five 34,600-dwt vessels are destined to operate between Europe and the

North American lakes, and as such are to be configured with a narrow breadth. Deliveries are due to commence in early 1999.

Tanker firm MIF has taken a fur- ther step in the expansion of its fleet by signing an agreement with a Japanese shipbuilder for a sec- ond Aframax newbuilding.

Construction of the double-hulled vessel is well advanced at the

Imabari Shipyard and delivery is scheduled for the first quarter of next year. The new vessel will be a sistership to the 107,000 dwt tanker MIF received from the same shipyard at the end of June.

South Korea

A big advance in productivity provides the backdrop to an increased newbuilding order intake by Daewoo Heavy

Industries (DHI) this year.

Formalization of contracts span- ning 35 ships has already topped the figure achieved for the whole of 1996.

It is anticipated that new work generated this year will total 40 ships worth around $2.5 billion.

While the South Korean company secured a 13 percent gain in pro- ductivity at its Okpo shipyard last year, it now expects to achieve a further step up of about 21 percent for 1997 against the 15 percent tar- geted in the annual plan.

The joint venture formed by the tanker interests of Helmut

Sohmen has ordered further VLCC tonnage, exercising an option for a 3,000 dwt tanker at DHI. Formed specifically for ordering VLCC ton- nage, the joint venture comprises

World Wide Shipping, Argonaut and Nordstrom & Thulin (N&T).

The ship is expected to be deliv- ered in the second quarter of 2000.

DHI has consolidated its position in the vehicle carrier market through a further deal with

Sweden's Wallenius Lines involv- ing high capacity newbuildings.

The contract for two vessels offer- ing stowage for 5,850 cars is highly significant from the standpoint of the yard's stability to attract repeat business from a blue chip client.

DHI has also secured its first floating production, storage and offloading (FPSO)vessel order, marking a significant break- through in its attempt to enter the sector. DHI will construct the hull of the FPSO vessel for the Terra

Nova oilfield off Newfoundland.

The company has won the contract for the Terra Nova Alliance, a con- sortium responsible for the design and construction of the facility and subsea components for developing the field. Construction is sched- uled to begin in August 1998 and delivery of the hull from DHI's

Okpo yard is due in January 2000.

Danish shipping company AP

Moller is believed to have entrust-

Maritime Reporter/Engineering News