New Build Markets Drying Up
Container Ship and North Sea Energy Support Orders Hit Floor
World box ship orders are down 49 percent and the North Sea energy support markets are feeling the pinch as well.
Lower freight rates and cargo volumes have impacted most major trade lanes. Ship owners after five years of historically high ship deliveries say new tonnage has been stalled by lower earnings. In 2005, 566 ships were ordered, 479 in 2006, and 530 in 2007. In the first eight months on 2008, only 179 ships were under contract. The only bright light in an otherwise bleak year was the 70 box ship orders by Maersk Lines in June.
Chartering rates are also off by 20 percent. According to shipping experts a 3500-TEU Panamax ship is now earning approximate $26K per day, down about $3,500 for earlier in the year, and down approximately $12.5K from 2006. However, pricing is up to build a 3500-TEU ship which is now being quote at $67 million versus $63 million at the end on 2007.
In the North Sea Market, energy support vessel orders have virtually dried up in recent months. Ship builders are beginning to witness a lack of business on fears that operator earnings may fall rapidly. With the decline in oil prices, exploration may also decline for a while, but experts indicate that may take a couple of years, and the price of oil may again move towards $150 per barrel.
In fact, OPEC has made it clear it will cut production if prices fall below $80 per barrel. Additionally, the market for oil rigs is strong and appears to be so till the end of 2010.