The ship repair market may be in for a tough period ahead as immediate portents point to a slowdown in the next two to three years, said a new report from Drewry Shipping Consultants.
Drewry’s “Shiprepair Spotlight Report” says the market has shifted from the 2008 position, when yards could pick and choose, to one which is far more competitive.
“The difficult fact for the shipyards is that owners have not recovered from the trauma of late 2008’s freight market collapse,” explained Drewry. “Since then, many have gone into minimum maintenance mode. They will only commit to doing what is absolutely necessary. This could be storing up problems for the future. It is also a concern if owners are prioritizing cost over quality.”
This makes it an unfortunate time for the influx of new capacity to the market, Drewry added. China has completed much of its expansion—though a few more yards still appear to be in the pipeline.
“The big question lies with what happens when a number of China’s shipbuilders see their orderbooks finally dry up. They might add to repair capacity,” said Drewry.
Meanwhile, two major new sites (in Qatar and Oman) have opened in the Middle East. Also seeing expansion is the repair sector in Turkey. “Very little repair capacity has been lost. Markets are always vulnerable when the building of market share is a priority for some,” Drewry said.
Drewry pinpointed looming issues that the ship repair market will have to contend with in the near future:
- The rate of increase in core survey docking requirements will slow significantly over 2012-2014.
- Recent fleet expansion will make a significant impact in 2015.
- A potentially more difficult repair market and the need to win business from later-life surveys could push more work to facilities in China and Eastern Europe.
One positive development for the repair market is that the global fleet continues to grow, which should continue even if not all of the recent newbuilding orders see the light of day, said Drewry.
