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The recent recovery in overseas shipbuilding activity came with the gradual recovery of the container sector from the fourth quarter of 2020. As freight rates started to rise and shipowners saw their competitors ordering new ships, they quickly followed suit. That is the main reason why most shipyards in Korea and China have their portfolios full.

Upcoming carbon emissions regulations have also contributed to owners deciding to order new ships, with the first wave of 14,000 to 15,000 TEU Mega ships now reaching a crucial mid-life decision stage, often being replaced by today’s larger 22,000 to 24,000 TEU ships.

The assessments are from Lloyd’s Register, to which another contributing factor is that major shipyards, such as Hudong-Zhonghua in China, are beginning to deal with Qatar Gas’ mega order for liquefied gas vessels to replace its existing LNG fleet. And Jiangnan and DSIC shipyards are opening up to the market for liquefied gas tanker builds. The size of these giant gas ships, as well as their container-carrying counterparts, takes up a lot of available yard space at the yards.

Owners cannot find at that moment vacancies for the construction of large ships to be delivered by 2024.

Competition for orders has also shifted the balance of power in the shipyard vs shipowner relationship and pushed up prices for new buildings, as have rising steel costs, meaning ships in most sectors are now around 30% more expensive than they were 12 to 18 months ago.

All of this raises a problem for smaller vessels with shorter build times. Owners are facing an economic challenge, namely why order a vessel now that will be expensive and will not be built for years to come? There is also the risk of idle assets if the impact of environmental regulations is not considered in design and operational decisions.


In Portos e Navios