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Owners get cold feet as newbuild pace eases
Tony Gray - Friday 30 May 2008
Greek owners' newbuilding investments have slowed dramatically.
So far in 2008, it is more a case of owners getting cold feet, with the value of contracts down substantially.
But with newbuilding prices historically high and a hefty global orderbook already in hand, who can blame them for easing the pace of contracting?
Clarkson Research Services estimates that in the first four months of this year the value of newbuilding orders fell 84% to $35bn, with European owners in particular pausing for breath after placing the lion’s share of contracts in 2007.
Managing director Martin Stopford comments: “Greek investors have pulled back from the dry cargo market which they dominated in 2007, contenting themselves with some tanker investment.
“German business is also well down.”
But as European owners take stock, Dr Stopford says cargo owners in Asia are “buying into the euphoria of global development” and becoming more active investors.
“This seems to be driven by concern about forward transport costs,” he explains. “After four years, sky high freight rates are looking normal and the economics of ordering ships or placing longer pay-out charters are looking much more acceptable than they did five years ago.”
In 2007, however, it was Europe’s independent shipowners who “put their money where their mouth is” and did “their bit to invest for the next phase of globalisation.”
They accounted for $123bn, or 53%, of world investment for the year of $233bn.
Greece led the way with with $36bn of orders, or 15% of the global total, followed by Germany with $30.9bn (13%) and Norway with $15.2bn (7%), although much of the latter’s spending related to the offshore industry.
Greek owners’ investment performance in the past two years has been impressive, given they were also responsible for orders aggregating $19.8bn in 2006, 12% of global spending of $161bn.
Last year, their emphasis was on bulk carriers, with $24.3bn — more than two thirds of all Greek investment — devoted to this type of tonnage. In 2006, it was tanker investment that accounted for two thirds of the total, with spending of $13.2bn.
In the first quarter of this year, however, Greek owners’ newbuilding investments have slowed dramatically, totalling just $1.2bn.
Even so, at an annualised rate this would result in an investment total in line with the 10-year running average before 2006, although newbuilding prices were much lower during that period.
