Steady as she goes
By that we mean that the type of ships delivered from Norwegian yards in 2007 followed the same pattern as for 2006. The yards make their living by outfitting offshore service vessels, building ferries, coastal fishing vessels and work boats, the latter primarily for fish farming. The sector comprising commercial cargo ships has unfortunately been wiped out (almost). Altogether NMI 2007 incorporates 133 newbuildings, which is 17 more than in 2006.
M/F “Fanafjord” – a LNG driven ferry delivered from Aker Yards, Brattvaag in January 2007.
Using newbuilding deliveries from Skipsrevyen’s 2007 issues as a basis a total of 43 offshore service ships, including seismic vessels and construction ships, were delivered in 2007. The comparable figures for the two preceding years were 38 in 2006 and 27 in 2005. All the hulls are being built abroad, so that the work part for Norwegian yards is the outfitting of the vessels. With increasingly more rationalisation, efficiency and pre-fabriction of modules the time spent at the yard is getting gradually shorter.
During the year 8 ferries were delivered, and in addition comes 8 catamaran ferries. This is about the same number as both 2006 and 2005.
The building of work boats follows the healthy times for the fish farming industry, and in 2007 we have covered 29 deliveries of this type of vessel, up from 25 last year and only 5 in 2005. The 2006/07 period is thus similar to the 2000/01 cycle.
Fishing
For Norwegian yards the building of fishing vessel has always been important. Fortunately 2007 signals hope of better activity in the years to come. In 2007 five vessels were delivered compared to zero the year before. One of them was the purser/mid-water trawler «Knester» with a length of 71.1 metre.
M/Tr. “Knester” delivered from Eidsvik Skipsbyggeri AS in July 2007.
In addition 3 large live fish carriers entered service, the same number as in 2006. These vessels are getting really big, and it is worth mentioning that Blaalid’s building of «Ro Master» involved the “whole package”, including the vessel’s hull.
The category Coastal Fishing Vessels showed 17 new ships delivered in 2007, which is unchanged from the last two years.
No ships in sight
We are here referring to cargo ships, both for overseas and coastal trading. 2007 witnessed the delivery of one chemical tanker, or rather juice-carrier, one Ro-ro vessel and three reefer/container ships (sister vessels).
Some years ago everybody accepted the Norwegian shipbulding industry’s visions that it was no good to try to get orders for conventional vessels; one had to concentrate on sophisticated ships with advanced technology, since these vessels had much higher value, and thus the yards would benefit in way of satisfactory financial results.
Well, since then – and we commented on this last year too – building conventional ships of sizes from 20,000 dwt upwards has been gold worth for shipyards in other countries. And the shipowners’ appetite for new ships has been unstoppable. One lesson to be learned from this is that diversification is a good thing, and it is not always the most advanced technology that pays the best price or shows the best bottom line result for the yard.
(It is hard to imagine that some 35/40 years ago Norwegian shipbuilders could produce the largest ships afloat, and build series of them).
Odense Staalskibsværft, which has built large containerships for a number of years, is a good example of how one can make use of the flexibility and of being in position to take advantage of an interesting market. This autumn the yard booked a series of large bulk carriers and was able to offer very attractive delivery positions starting 2009. This has no doubt resulted in a very high price for the ships.
40/50 years and still afloat
Very few in the shipping industry, and nobody in the shipbuilding business or within the bureaucracy, seem to be particularly worried over the extremely old Norwegian coastal fleet, nor do they see much future upside by making a renewal effort. With a minimum of crew onboard, accidents which happen regularly have only a passing interest, and the only way to get the media’s attention will be if there should be an oil spill.
The typical coastal Shipowner would need financial assistance to renew his fleet. There are no signs that the Government finds this interesting. And without the Government’s help, and based on today’s shipbuilding prices, it is an illusion to think that a large scale fleet renewal can become a reality. So we better face up to the fact that the world’s oldest coastal fleet will be humping along the Norwegian coast for many years to come.
It is tempting to draw a comparison to Holland where the yards show extensive lists of multi-purpose small cargo ships due to be built. So it obviously can be done!
It’s an all time high market for Norwegian shipyards.
Handing out presents
We have commented on the phenomenon several times before, and basically it could appear as if the Norwegian yards have been much too willing to give away options. The price of the options are seldom reported when a newbuilding contract is announced. So it is fair to assume that the option is at the same price as for the fixed order(s).
During an upturn everybody should naturally be reluctant to give away options. The upside in this case will only benefit the Shipowner, so the option price should in any case be higher than the firm order. But seeing that almost all the options for offshore ships at Norwegian yards have been exercised, and some have been resold at a substantial profit, one must be permitted to conclude that some of the yards have been fast asleep when it comes to the development of the newbuilding market.
We can to some extent understand why they did it 3 or 4 years ago, but not when the enormous interest for new ships was evident for everybody to see.
Offshore activity but no rigs
Norwegian investors have been very active in investing in oil rigs during the past couple of years, but the country’s shipyards have not followed this up, apart from Aker Kvaerner who is building two semi-submersible drilling rigs at the Stord facility (see above comments with reference to shipbuilding 35/40 years ago). Most of the other orders have gone to Asian yards. The two Norwegian built rigs which cost about NOK 7.8 billion total, will actually be several months delayed.
Shipbuilding globally
Internationally, the order book passed the 8,000 ship mark in July and 9,000 during October, and as of 1st November the figure was 9,060 ships of total 482 million deadweight corresponding to 318 million GT.
The “dull” bulk carrier is definitely back in fashion, and during the 10 first months of 2007 2,140 units (over 10,000 dwt) were contracted of total 163 million dwt. This can be compared to 1,730 ships of 136 million dwt for the full 2006, and 2006 was considered an excellent year. The bulk carrier order book has nearly doubled during 2007.
Looking at a type of ship where Norwegian yards have proven that they compete, there was contracted 315 chemical tankers in the 10/60.000 dwt size worldwide and another 140 product tankers within the same size bracket during the period January to October. (Figures from World Shipyard Monitor).
And while some Norwegian yards are struggling to show black figures, many of the Asian yards are now really making money.
Spending like no tomorrow
What should an international Shipowner do if not invest in ships? So this is exactly what has happened. The market upturn which started in the autumn of 2003, and thus is one of the longest lasting in the shipping history, has provided the shipping community with enormous wealth. And they are spending it fast.
During the first 10 months of 2007 bulk carriers worth around 69,000,000,000 US dollars have been ordered, and around $36 billion worth of tankers have been contracted. For the full 2006 around $23 billion were invested in new bulk carriers and $56 billion in tankers.
A large investment sum has been spent on container ships too, about $45 billion in the period January – October compared to $30 billion for the full 2006. (Figures from World Shipyard Monitor).
zachs@skipsrevyen.no