The views of the Publishers do not necessarily correspond to the views of Lambos Maritime Services Ltd.

What do you do with a couple of empty newbuilding docks when there’s little prospect of filling them for a while? Cast your mind back, if you can, to the mid 1980s where a virtual halt in new contracting left many modern ship construction facilities in Japan, particularly, but elsewhere too, with nothing to do. Being the ultimate pragmatists that they are, the Japanese filled in docks or closed some of them down and, as a result, many of the country’s shipbuilding entities are still around today. Yards in Europe were less fortunate: many simply could not compete with highly automated production processes and cheaper prices in the East and went out of business as a result.

Today, however, there is a new generation of shipbuilders, many of them in China and elsewhere in Asia. And, if you’ve just built a new shipyard and you don’t have the same degree of Japanese pragmatism, you could well be more reticent about filling in a dock or changing its function. Instead, you might well hang on grimly in the hope of better times around the corner.

Experts believe that world shipbuilding has reached another watershed – in much the same way as it did in the 1980s – and some very tough decisions are now needed. Global shipbuilding capacity has reached record levels and, despite a flurry of orders in various sectors – orders which, by the way, are of deep concern to analysts – there is virtually no chance that it can be taken up any time soon, if ever.

Just a few days ago, Fincantieri chairman Corrado Antonini who is also the current head of the Community of European Shipyards Associations (CESA), warned that more than 50% of shipbuilding capacity could become surplus to requirements over the next ten years. Antonini was speaking at the Jecku meeting in Nantong, China. Shipbuilders from Japan, Europe, China, South Korea and the US were meeting to discuss the industry’s future: Antonini’s message was not a happy one. Calling the potential capacity surplus the biggest problem that the world’s shipyard now face, he said that orderbooks were still declining and experts reckon that no more than half of world shipbuilding capacity would be required for at least the next ten years.

Meanwhile, in a few days’ time, the new shipyard at Ras Laffan in Qatar – capable of new construction under the management of Damen and ship repair managed by Singapore’s Keppel Offshore & Marine, will officially open for business. Much of the new facility’s workload is expected to originate from Nakilat’s ongoing fleet maintenance requirements relating to its 50-odd vessel LNG fleet, but the yard will also be punting for third-party newbuilding and repair business too.

A host of new construction facilities in China have time on their hands already, and industry experts are predicting that the problem can only get worse. Despite delays and cancellations, the world orderbook still stands at record levels and yards will still be turning out over-priced ships for many months to come. And the recent flurry of new contracting is far below capacity requirements and will still leave many facilities with virtually no work in hand.

Shiprepair yards are, to some extent, innocent bystanders. The world fleet is larger than it has ever been and ships in service still need maintenance and repair. However, owners and operators are pursuing every conceivable means of cutting repair work scopes at exactly the same time as idle newbuilding yards are attempting to move in on the repair sector. Seasoned repairers warn of this danger, however, pointing out that repair and new construction are completely separate businesses which require different approaches in both management and operation.

For many repair yards, there is the added concern of extended drydocking intervals. Although the extension of repair intervals from 60 to 90 months is still being assessed and tried out by leading classification societies and ship operators, ongoing repair demand for certain qualifying ships is almost certain to fall off in due course, as a result of less frequent dockings. Few industry sources would argue that there are several tough years ahead – whether in new construction or repair – but it is not yet clear whether they realise just how difficult the next five years are likely to be.

Republished by kind permission of: A&A Thorpe, 131a Furtherwick Canvey Island, Essex SS8 7AT Tel: +44 (0) 1268 511300 Fax: +44 (0) 1268 510467 shipaat@aol.com