Over 40,000 industry participants will soon gather in Hamburg for the biannual SMM trade fair, a key event for yards and suppliers. In this week’s Analysis, we chart market developments since the last SMM and at key points over the long term market cycle. Alongside a strong flow of newbuild orders and good retrofit demand, “managing disruption” and “going green” remaining key themes today.
2008-16: Boom to Bust
Back at SMM 2008, weeks from the Lehman crisis, shipping rates (ClarkSea $36,000/day, see Table), were riding high with strong order flow (46m CGT in Jan-Jul 2008, a record 94m CGT in 2007). Although actual shipyard output was still to peak (2010: 54.2m CGT), the shipbuilding market was about to enter a period of depressed demand, declining output and surplus capacity (albeit periods of stronger ordering e.g. 2013). Ordering reached a low in 2016 (8.9m CGT in Jan-Jul, 14.3m CGT for full year), although again yard output would not “bottom out” till 2020 (29.7m CGT).
2016-22: Recovery
Two years ago, we profiled both the “green shoots” observed at 2018 SMM (an active cruise newbuild market, an accelerating SOx scrubber program) followed by the Covid-19 “bounce” in 2022, including an all time high containership order run (7.3m TEU across 21-22). And the green agenda was sharply in focus (IMO soon to agree “net zero”).
2024: Strong Order Flow
This year’s SMM will kick off with robust cross market charter strength (Clarksea ~$25,105/day vs ~$7,000 in 2016), with geo-politically led disruption, improving volumes and some supply side constraints all supportive. There has been a strong flow of newbuild orders ($114.5bn / 35.6m CGT in Jan-Jul) with tanker and gas orders prominent and now a further wave of containership ordering. Prices are elevated, with our newbuild index up 16.5% since the last SMM and now sitting less than 1% off the all time 2008 high (although this is 40% lower on an inflationary adjusted basis). The shipbuilding market remains “tight” with typical leads times of 3-4 years despite some increases in capacity (in China we are tracking a range of reactivation and expansion, albeit no “greenfield”). Global output this year is expected to increase to 41m CGT.
2024-50: Driving Transition!
Alongside the healthy order flow, “green” investments remain crucial (energy security has risen up the agenda since last SMM). Over 50% of global tonnage on the orderbook is now alternative fuel capable (SMM 2022: 40%), with the share of orders LNG dual fuel increasing this year relative to methanol (7.1m vs 2.1m CGT through August, excl. LNG carriers). Investments at ports continue to lag: there are now 192 ports with LNG bunkering facilities (+82 being developed) and 208 ports with shore power connection. There will be fantastic innovation on show at this SMM and we are tracking significant Energy Saving Technologies (ESTs) now on ~34% of world tonnage (NB: we will publish more detail in our monthly “Green Technology Tracker” during SMM). Despite the progress, there is still a huge way to go with our projections suggesting strong long term fleet renewal requirements ($5.3 trillion of newbuild orders through 2050) driven by ageing fleets (fleet av. age up to 13.9 yrs) and decarbonisation (shipping is ~2% of global emissions / 1bn tonnes of CO2e). So a busy SMM!
| 2008 | 2016 | 2022 | 2024 | ’24 v. ’22 | |
| Clarksea ($/day) | 36,347 | 7,364 | 38,330 | 25,105 | -34.5% |
| NB Price Index | 192 | 126 | 162 | 189 | +16.5% |
| SH Price Index | 305 | 80 | 212 | 182 | -14.0% |
| SY Output (m CGT) | 45.5 | 35.6 | 31.7 | 41.2 | +30.2% |
| % China | 25.0% | 32.7% | 48.4% | 52.2% | +3.8pts |
| Active Yards | 1,032 | 595 | 443 | 373 | -15.8% |
| Vessels >20,000 dwt | 312 | 185 | 163 | 160 | -1.8% |
| Fleet (m GT) | 808 | 1,252 | 1,520 | 1,638 | +7.7% |
| Orderbook (m GT) | 413.4 | 192.1 | 197.8 | 248.2 | +25.5% |
| Obk (% fleet, dwt) | 54.7% | 14.7% | 10.9% | 13.3% | +2.4pts |
| Obk Value ($bn) | 623.0 | 285.1 | 303.7 | 433.8 | +42.8% |
| Forward Cover (yrs) | 5.4 | 2.8 | 3.8 | 3.6 | -0.2yrs |
| Avg. Age (5,000+ GT) | 13.9 | 10.9 | 13.1 | 13.9 | +6.0% |
| Scrub. Fitted Ships | 246 | 4,571 | 5,894 | +28.9% | |
| Fleet EST Fitted (%GT) | 2.4% | 15.5% | 28.8% | 33.8% | +5.0pts |
| Fleet Alt. Fuel (%GT) | 1.2% | 2.3% | 4.9% | 6.9% | +2.0pts |
| Obk. Alt Fuel (%GT) | 1.6% | 10.3% | 40.3% | 50.9% | +10.6pts |
| % LNG | 1.3% | 9.4% | 35.2% | 37.4% | +2.2pts |
| % Methanol | 0.0% | 0.2% | 1.9% | 8.8% | +6.9pts |
| LNG Bunkering Ports | 0 | 58 | 163 | 192 | +17.8% |
| Orders (Jan-Jul, $bn) | 147.9 | 22.8 | 76.2 | 114.5 | +50.3% |
| Orders (Jan-Jul, mCGT) | 46.3 | 8.9 | 32.4 | 35.6 | +9.8% |
Source: Clarksons Research
