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FORECAST 2000 WORLD SHIPBUILDING A MARKET POISED FOR RAPID TAKE-OFF AND SUSTAINED GROWTH Editor's note: This article pertains to commercial shipbuilding. Details of the U.S. Navy shipbuilding program, which includes the construction of 90 vessels and three major conversions over the next five years, are highlighted in Mr. McCaul's article, "Status Report on Navy Shipbuilding and Repair," in the Naval Technology & Ship- building supplement in this issue. The past 15 years have been diffi- cult times for many shipbuilders and marine equipment manufactur- ers. Massive overbuilding of inter- nationally trading ships in the early 1970s and dramatic structural changes in the flow of international trade combined to make a very de- pressed situation. Many marine firms throughout the world have been unable to weather this eco- nomic storm. This difficult period, however, is coming to an abrupt end. A business turnaround is oc- curring in major shipping sectors and aging ships present a massive fleet replacement requirement. In fact, as will be discussed below, the take-off in worldwide ship construc- tion has already begun. Ignoring usual short term cyclical movements, long term business con- ditions in the two major marine sec- tors—tankers and dry cargo ship- ping—have dramatically improved over the past several years. World trade in oil has been grow- ing since the mid-1980s. OPEC pro- duction during the first eight months of 1989 was 14 percent high- er than the corresponding period last year—and more than 50 percent higher than production in the mid- 1980s. The world oil trade has grown from about 24 million barrels per day (MBD) in 1985 to more than 30 MBD in 1989. As a result, tanker charter rates have climbed and resale prices of secondhand tankers have soared. For example, a 350,000-dwt VLCC built in the mid-1970s would bring a price of $42 million today. Just one year ago, its resale price would have been $24 million. Five years back the ship was worth $6 million. Spec- ulators have made vast killings in this market—including the Loews Group who is understood to be dis- cussing sale of 50 percent interest in six 12- to 15-year-old ULCCs now valued at $300 million. Rates in the bulk carrier markets have also improved over the past several years. One year time chart- ers are fetching rates which double or triple those in the mid-1980s. By James R. McCaul IMA Associates, Inc., Washington, D.C. ALL SHIPS IN THE WORLD ORDER BOOK AT THE END OF THE SECOND QUARTER, 1989 Under Construction Not Commenced TOTAL Where Building Percentage Gross Gross Gross of World Deadweight No. Tonnage No. Tonnage No. Tonnage Tonnage Tonnage Argentina 19 68,503 11 23,979 30 92,482 0.34 140,241 Australia 25 22,638 7 5,409 32 28,047 0.10 22,033 Bangladesh 3 950 2 825 5 1,775 0.01 1,050 Belgium 5 78,000 1 20,000 6 98,000 0.36 97,000 Brazil 32 690,290 14 324,500 46 1,014,790 3.71 1,626,109 Bulgaria 5 65,434 16 152,346 21 217,780 0.80 335,390 Canada 7 30,016 2 1,400 9 31,416 0.11 4,695 Chile 7 2,400 5 2,150 12 4,550 0.02 28 •China, People's Republic of 25 283,719 52 578,457 77 862,176 3.15 1,292,915 China, Republic of (Taiwan) 7 426,500 10 592,800 17 1,019,300 3.73 1,785,490 Colombia 1 207 1 207 327 Denmark 23 168,686 38 608,227 61 776,913 2.84 956,147 Egypt 7 24,177 1 9,329 8 33,506 0.12 33,600 Finland 22 454,877 7 141,215 29 596,092 2.18 115,366 France 19 106,877 14 104,419 33 211,296 0.77 72,624 "German Democratic Republic 1 11,977 50 530,000 51 541,977 1.98 446,862 Germany, Federal Republic of 50 537,127 24 270,399 74 807,526 2.95 812,030 Greece 28 39,455 4 12,780 32 52,235 0.19 56,981 Guatemala 1 130 1 130 Iceland 1 143 1 200 2 343 100 India 62 172,099 12 106,860 74 278,959 1.02 426,118 Indonesia 15 16,884 2 7,000 17 23,884 0.09 23,270 Iran 3 2,874 1 200 4 3,074 0.01 Israel 1 492 1 492 Italy 69 608,349 10 177,000 79 785,349 2.87 788,103 Japan 224 3,779,147 200 4,018,714 424 7,797,861 28.53 11,556,401 Korea (South) 62 2,264,265 108 4,254,100 170 6,518,365 23.84 11,448,664 Lebanon 1 300 1 300 Malaysia 4 4,000 2 19,000 6 23,000 0.08 39,350 Malta 8 28,200 8 28,200 0.10 53,920 Mexico 25 49,984 39 19,813 64 69,797 0.26 94,254 Morocco 2 755 2 600 4 1,355 Netherlands 65 118,006 36 107,212 101 225,218 0.82 271,008 Norway 20 23,918 23 70,550 43 94,468 0.35 108,333 Pakistan 2 11,150 2 11,150 0.04 17,550 Peru 33 15,071 33 15,071 0.06 5,400 Poland 63 380,575 91 608,554 154 989,129 3.62 1,273,894 Portugal 41 76,568 6 8,946 47 85,514 0.31 120,976 "Romania 3 89,818 32 490,264 35 580,082 2.12 892,090 Singapore 15 29,208 9 19,980 24 49,188 0.18 59,551 Spain 124 462,930 89 752,794 213 1,215,724 4.45 1,856,618 Sri Lanka 1 350 1 350 Sweden 15 24,314 3 24,250 18 48,564 0.18 19,980 Thailand 1 2,500 1 2,500 0.01 Turkey 22 80,349 19 144,700 41 225,049 0.82 352,950 •U.S.S.R. 1 18,526 4 115,250 5 133,776 0.49 221,970 United Arab Emirates 3 1,147 3 1,147 1,670 United Kingdom 40 197,313 9 55,946 49 253,259 0.93 273,741 United States of America 52 26,671 64 15,078 116 41,749 0.15 46,250 Venezuela 6 650 6 650 200 Yemen, People's Democratic Republic of 1 144 1 144 250 Yugoslavia 36 801,806 27 640,820 63 1,442,626 5.28 2,308,667 WORLD TOTAL 1,307 12,300,339 1,048 15,036,196 2,355 27,336,535 100.00 40,060,166 Source: Lloyd's Register Merchant Shipbuilding Returns "Information Incomplete 12 Maritime Reporter/Engineering News
