Shipping returns to SMM ‘in rude health’ with strong order flow and shifting agenda: Clarksons
Reviewing the market backdrop to this year’s shipbuilding and marine equipment trade fair SMM in Hamburg, Steve Gordon, Global Head of Clarksons Research, the data and analytics arm of the Clarksons, comments that two years on from the last SMM, the shipbuilding and marine equipment sectors return to Hamburg in “rude” health.
“The global newbuilding orderbook is up 33% ($666bn, with ~60% of this to flow through to suppliers) and the average backlog is ~4 years (2030 ordering typical in some segments). Underlying shipping markets are ‘stellar’ with our cross-sector day rate index the ClarkSea, ‘turbocharged’ by Hormuz disruption, north of $40,000/day (its highest ever position prior to SMM).
“And while newbuild prices have been more stable in the past two years, average second-hand asset pricing has jumped 17% (~30% in crude tankers). Ship repair also seems well positioned for now with tailwinds including an ageing ‘wave’ of vessels reaching 3rd and 4th special surveys. “
Gordon goes on to point out that shipping’s agenda has “shifted’ with the green agenda no longer the main focus of attention. Instead, he says: “Shipping is firmly at the ‘frontline’ of extreme global geo-political dynamics, and the related ‘disruption’ is helping drive an extended run of exceptional cross-segment cashflow. Order volumes are near record levels in several sectors and order backlogs for suppliers and yards (especially in China) are robust.
“With the green consensus ‘stalling’, alternative fuel investment share has dropped to 25% of orders by tonnage (from 50% four years ago albeit in part reflecting tankers return to orderbook mix) but adoption of Energy Saving Technologies (fuel economics plus emission economics) remains strong (longer-term perspective on net zero, understanding its importance as an underlying trend seems sensible).
“A balanced view in other areas is also important: an understanding day rates in some segments have become ‘heroic’, some orderbooks look ‘toppy’ (although overall orderbook is 22% of fleet not the 50% of ‘08), yard capacity is ramping up, fleets are still ageing and fleet renewal is needed, the world needs more ships per tonne of cargo moved today but quantifying is trick [given] energy security and energy transition, tech is moving apace, geo-political disruption will throw up both more opportunities and more risks to manage.
“Enjoy SMM and hope to see you there.”
Clarksons is attending SMM at Stand B1.OG.303.