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Lloyd’s List Intelligence Shipbuilding Outlook Sample ReportLloyd’s List Intelligence consultants are industry leaders in the future outlook of shipbuilding. Their fleet modelling tool has been built up over the last two decades to take economic and political facts and policy, layer them over extensive vessel characteristics, company activity and fleet movements data, to shape unbiased predictions on shipbuilding activity and removals.

Our monthly Shipbuilding Outlook reports provide commentary on the main drivers for current newbuilding orders and provide forecasts on shipbuilding output and global fleet development, over the coming five to ten years.

For more information on the Shipbuilding Outlook Reports, or any other Lloyd’s List Intelligence service, please contact Rory Proud on +44 (0)207 551 9920 or email Rory.Proud@informa.com.

Shipbuilding OutlookMay 2016, issue 47Focus on dry bulk & general cargo

Contents of full 20 page report. Please note this sample is a redacted version.

1 Business environment

1.1 Political, social & cultural development

1.2 Ecology and technology

1.3 Production factor indicators

2 Demand for transport

2.1 Trade

3 Dry bulk and general cargo markets

3.1 Structure, strategies, products and services

3.2 Supply & demand balance – contracting drivers

3.3 Shipbuilding market, dry bulkers, general cargo

4 Total shipbuilding market outlook

4.1 Fleet changes

4.2 Shipbuilding regions

4.3 Orderbook & deliveries, tables

4.4 Cancellations & contracts, tables

4.5 Removals & fleet size, tables

5 Current key figures

Summary & key points

In April the International Monetary Fund (IMF) cut its global economic growth forecast for 2016 by 0.2 percentage points compared to the January forecast, to 3.2%, and downgraded the forecast for 2017 by 0.1 percentage point, to 3.5%. The IMF also cut its GDP growth estimate for all major advanced economies, including the US, the euro area, the UK and Japan.

Total seaborne dry bulk trade was around 4.5Bn tonnes in 2015. In April 2016 the World Trade Organization (WTO) cut its global trade growth forecast. The WTO expects that world trade will increase by 2.8% in 2016, which is considerably lower than the previous forecast of 3.9%.

In April 2016 the dry bulk fleet consisted of 11,115 ships, of which 1,668 are larger than 100,000dwt. The total fleet stood at 782M dwt. Fleet growth in the previous five years was tremendous, with no less than 230M dwt added. The fleet is expected to grow by 180M dwt in the next five years. The forecast for removals in the 2016-2020 period is modest in comparison with the previous five years when 137M dwt was removed. The forecast stands at 63M dwt, divided between 1,100 ships. We forecast that 3,125 ships will be ordered over the same period, which compares reasonably well with the previous five years.

There are 16,096 vessels with total capacity of 76.6M dwt in the general cargo fleet. Fleet capacity is forecast to grow at an annual average rate of 0.4%, to 78.5M dwt, between 2016 and 2020. In terms of numbers, however, the fleet will shrink.

Although the forecast is that the fleet will at best remain stable, almost 240 new contracts are forecast to be signed each year on average purely to replace old tonnage.

In April 2016 the Other dry fleet stood at 2,448 ships, with capacity of 10.9M dwt.

When it comes to new contracts, our forecast is for 25 landing craft and 15 special ships each year on average. Since a lot of reefer cargo is moving into containers, our forecast for new contracts is very low. We expect only one reefer ship to be ordered each year.

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Trade

For more information on the Shipbuilding Outlook reports, please contact Rory Proud on +44 (0)207 551 9920 or email Rory.Proud@informa.com

Total dry bulk trade was around 4.5Bn tonnes in 2015, of which 30% (1.37Bn tonnes) was iron ore, followed by 26% coal (1.19Bn tonnes). Dry bulk trade expanded by 1.0% in 2015. Weak trade growth was due to a 6% drop in the total international seaborne coal trade combined with slower growth in the iron ore trade.

In 2015 India passed China to become the world’s largest seaborne importer of coal, with a share of 19%, while China’s share dropped to 15%. In 2015, total seaborne coal trade declined for the first time in almost 30 years, as China reduced coal imports in an attempt to reduce air pollution and as a consequence of the slowdown in economic growth. Chinese seaborne coal imports shrank to 136M tonnes in 2015 and are forecast to drop further in 2016. In addition, India also reduced coal imports in 2015, to 172M tonnes, as domestic coal production expanded. Indian coal output jumped almost 9% in 2015, to 536M tonnes.

Chinese ore imports totalled 1.2M tonnes (56% of total market share). According to Clarksons, Chinese seaborne iron ore imports increased by only 3% in 2015 compared to an average growth of 8% over the past five years. Chinese annual steel output shrank 2.3% (to 804M tonnes) in 2015. This is the first contraction since 1981 and this declining trend has continued in the first months of 2016.

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2016-2020CAGR3.0%

Figure 5: Seaborne trade of dry bulk

Figure 6: Seaborne trade of coal and ores

China is a large client for ores, while India is the largest importer of coal© Informa UK limited, 2016. All rights reserved.

Coal trade by destination, 1.2bn tonnes

Mid East & Africa / 2%C & S America / 3%USA & Canada / 1%North Europe / 10%South Europe & Med / 8%China / 15%India / 19%Other Asia & Pacific / 42%

Ore trade by destination, 2.3bn tonnes

India / 2%Other Asia & Pacific / 16%Mid East & Africa / 6%C & S America / 2%USA & Canada / 4%North Europe / 9%South Europe & Med / 5%China / 56%

© Informa UK limited, 2016. All rights reserved.

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Dry bulk and general cargo markets

Structure, strategies, products and services

All ships in this dry bulk & general cargo issue of the Shipbuilding outlook carry dry cargo. In dwt tonnes, dry bulkers account for the majority by a long way while general cargo carriers are the most numerous. We have also included the Other dry sector since that is an offshoot of the general cargo fleet. Here reefers is the largest contingent but the severe pressure of competition from container carriers in the last 15 years has led to a large reduction in fleet numbers and it is currently down to 1,488 ships. Landing craft account for 673. The Special category is 287 ships and is dominated by heavy lift vessels.

The general cargo ship is the original merchant ship – used for all purposes – carrying everything from grain to containers. Many general cargo ships are operated by the single owner – who often sails with the ship. In other words, there are very many operators out there and this part of the market is far from being consolidated.

Basically there are three main strategies used by general cargo shipowners. The most common is operating on the spot market taking journeys with different cargo but within one and the same region. Many ships also operate as container feeder carriers. Often these contracts are relatively short, but prolonged frequently for the same operator. The third is industrial traffic for one and the same company, for example in the steel or forest industry.

The multi-purpose nature of general cargo carriers is a fact and even today they are used to transport most kinds of commodities. The fleet is very numerous.

The dry bulk market is also a market with numerous operators – although there are also large operators. However, the business is far from being consolidated. The tonnage surplus has put severe pressure on bulker freight rates recently. Rates have been at, or even below, operating cost in the past half-year. In February, the benchmark Baltic Dry Index reached an all-time low of 290 and has since then recovered, but only slightly.

u New orders for dry bulkers in 2016 will be level with those in 2015 u 240 general cargo orders each year are needed to maintain the size of the fleet

Figure 7: Dry bulk timecharter rates, $/day

Dry bulk rates are at unsustainably low levels – and will come upSource: Gothenburg Chartering

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Supply & demand balance – contracting drivers

For more information on the Shipbuilding Outlook reports, please contact Rory Proud on +44 (0)207 551 9920 or email Rory.Proud@informa.com

In April 2016 the dry bulk fleet consisted of 11,115 ships, of which 1,668 are larger than 100,000dwt. The total fleet stood at 782M dwt, of which 100,000+ dwt ships account for 316M dwt. As Figure 8 illustrates, growth in the fleet in the previous five years was tremendous, with no less than 230M dwt being added. If we add in 2010 as well, the number grows to 310M dwt. Fleet growth is forecast to be lower in the next five years, with growth of 180M dwt over the 2016-2020 period. Going forward, the 60,000-100,000dwt size is forecast to be the main driver of growth.

The age profile graph (Figure 9) illustrates a relatively young fleet, with 492M dwt being from 2009 or more recently. The orderbook is around 125M dwt, of which about 50M dwt will be delivered in 2016 and 2017. Almost half of that capacity will be in the 60,000-100,000dwt range.

u The delivery forecast for 2016-2020 stands at 242M dwt, divided between 3,024 ships, which is considerably less than the 366M dwt (4,600 ships) delivered in 2011-2015.

Figure 9: Dry bulk age profile including orderbook, M dwt

The dry bulk orderbook looks fairly modest© Informa UK limited, 2016. All rights reserved.

© Informa UK limited, 2016. All rights reserved.

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Figure 8: Dry bulk fleet, M dwt

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About the shipbuilding outlookThe Shipbuilding Outlook is a monthly report from Lloyd’s List Intelligence, accompanied by a compilation of aggregate graphs, forecasting newbuilding order volumes and fleet development.

The team behind the forecasts have been developing the report over the last two decades, drawing upon their Flow 4.0 (Fleet of the World) model. Newbuilding orders are forecast for the coming 5 to 10 years, as well as expected deliveries, removals (scrapped, lost and converted), cancellations and the fleet.

The report is based on Lloyd’s List Intelligence ships data and covers, generally speaking, all seagoing trading ships of 100gt and above. They also cover non-IMO number ships engaged in fishing, being barges or classified as hydrofoils or hovercraft, but still over 100gt. Altogether, the reports cover more than 113,000 existing ships. Each issue of the Shipbuilding outlook comments on the latest development in the business environment, highlighting important political, social and cultural developments. It also covers the latest macro-economic developments. This is followed by the expected effects on trade, transport and seaborne trade.

The main section analyses the overall development of world shipping and shipbuilding markets, including changes in capacity, orderbook, deliveries, contracting, scrapping and rates. Each issue will include detailed five-year forecasts on new ordering, deliveries and removals. Every report is accompanied by a compilation of aggregate graphs.

Each issue has a theme focusing on a different market segment as specified below.

u Ferry, cruise & yacht. This issue highlights the markets for different types of ferries, the cruise industry and also the newbuilding market for large yachts. Delivery in January and in July.

u Offshore & service. For Offshore, the forecast covers drilling, production, construction, tugs and supply, seismic and crew ships. For the service sector, tugs, dredgers, SAR & patrol, research and workboats are highlighted. Delivery in February and in August.

u Tankers. The tanker issue focuses on the oil, chemical, LNG and LPG tanker market. Delivery in March and in September.

u Dry bulk & general cargo. This issue contains forecasts on the dry bulk carrier and general cargo markets. Delivery in May and in November.

u Container & ro-ro. This issue includes the container, vehicle ro-ro and other ro-ro markets. Delivery in June and in December.

u Total shipbuilding. This issue will be the first of the year to publish actual figures for the previous year. Delivery in April.

u Ship’s equipment overview. This issue focuses on the actual figures in the databases for installed ship’s equipment. Market share description for different manufacturers of engines, gears etc is coupled with a table showing the average number of engines, propellers, kW etc per vessel type and size. Delivery in October.

Issue/Delivery month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecFerry, cruise & yacht

Offshore & service

Tankers

Dry bulk & general cargo

Container & ro-ro

Total shipbuilding

Ship’s equipment

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ApproachThe figure to the left illustrates the analytical approach used in this publication. Changes in demand for seaborne transport capacity are a function of economic growth and international trade, which in turn result from changes in the business environment.

The effects of changing demand for seaborne transport capacity depend on how the markets are organised; the market structure (e.g. monopoly, oligopoly etc), strategies used to meet demand and products and services developed to meet demand, as well as the different components of utilisation.

For more information on the Shipbuilding Outlook reports, please contact Rory Proud on +44 (0)207 551 9920 or email Rory.Proud@informa.com

Notice and terms of use

Copyright © Informa UK Limited 2016. All rights reservedThis report is distributed to the primary user of the delivery email account and may NOT be redistributed without the express written agreement of Lloyd’s List Intelligence. The primary user may make printed or electronic copies for his or her exclusive use. Except as permitted above or under current legislation no part of this work may be photocopied, stored in a retrieval system, published, performed in public, adapted, broadcast, transmitted, recorded or reproduced in any form or by any means, without the prior permission of the copyright owner.

Limitation of liability

Lloyd’s List Intelligence assumes no responsibility and shall not be liable to any person for any loss, damage or expense caused by reliance on the information or advice in this document howsoever provided, unless that person has signed a contract with the relevant Lloyd’s List Intelligence entity for the provision of this information or advice and in that case, any responsibility or liability is exclusively on the terms and conditions set out in that contract.

Title: Shipbuilding outlook: dry bulk and general cargoAuthors: Christopher Pålsson: +46 (0) 31 704 4330, +46 (0)708 53 77 10Niklas Bengtsson: +46 (0) 31 704 4330, +46 (0)709 99 69 77Andreas Krantz: +46 (0) 31 704 4330Kristina Weber: +46 (0) 31 704 4330Elena Skibuk: +46 (0) 31 704 4330E-mail: info@lloydslistintelligence.com

StructurePlayers, Ownership, Management

StrategiesLow cost, Differentiation, Cyclic adaptation

Products & servicesMarket segments, Production factors

Capacity utilisationDemand & Supply

Legal frameworkPolitics, Policies, Form of government

Production factorsLabour, Capital, Material

TechnologyTechnical solutions, Innovations

EcologyGlobal, Regional, Local

Social factorsReligion, Ethnology, Ethics

Economic growthGlobal, Regional, Local

TradeGlobal, Regional,

Local

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© Informa UK limited, 2016.

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Contact usFor more information on the Shipbuilding Outlook reports, please contact Rory Proud on +44 (0)207 551 9920 or email Rory.Proud@informa.com.

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