Power In Numbers
Far East Shipyard prices are on the move again. The scurry to place new contracts so far this year is good news for the world's principal shipbuilders — at least in the short-run. The danger is that the volume of new contracting will encourage existing builders to "recommission" old resources — whether actual building docks or workers constructing ships — while new yards proceed with plans to commission new capacity. Take a look at mainland China, for instance: Coming from almost nowhere in world terms a decade ago, China is now the world's third largest shipbuilder and is in third place on booking new orders.
Admittedly still a long way behind Japan — with more than a third of global orders — and South Korea with a little more than a quarter, China is a major new force in world ship construction which just might take the gloss off the biggest global orderbook most builders can remember.
The world's major builders have not been slow to see the writing on the wall. They have, after all, had a few hard lessons to learn over the last two decades. China has encouraged foreign shipbuilders such as Kawasaki Heavy Industries (Jiangsu province), Samsung Heavy Industries (Ningbo) and Hyundai Heavy Industries (Dalian) to help it make a mark. It needs these foreign builders — as a seal of quality — but is still wrestling with yard productivity and quality. With a workforce costing about 1/12 of its peers, there must be a degree of comfort for those promoting Chinese newbuildings on the international market as well as some 24 very convincing arguments as to why ships should be built there. Japan achieved a 39.3 percent share of new shipbuilding in 1996, completing 617 ships of 10,182,000 grt, according to a survey by the Shipbuilders Association of Japan (SAJ). This reflected a 9.5 percent rise over the preceding year. South Korea stayed in second position with a 28.5 percent share, completing 188 vessels of 7,370,000 grt during the year. Germany was third with 4.6 percent, followed by China with a 4.4 percent share.
Global completions totaled 283 bulkers of 9,805,000 grt; 162 tankers totaling 6,290,000 grt, 202 containerships of 4,689,000 grt and 57 LNG carriers comprising 1,078,000 grt.
Order levels for new ship construction received by Japanese shipyards returned to a more stable level in August after the dramatic rise in grt terms seen in the previous month. Japanese Ministry of Transport statistics, which record orders for ships of 2,500 grt and over, reveal domestic yards secured contracts for 31 vessels of 778,000 grt in August compared with 42 ships of 2.025 million grt received in July. August's figure was 61.6 percent, or 11 ships of 1.25 million grt lower than July's.
Meanwhile, boosted by orders for almost two million grt of newbuildings in September, South Korea's orderbook for the first nine months of this year is almost triple the figure achieved in the corresponding period of 1996. Statistics from the Korea Shipbuilders' Association indicate that domestic builders now command an orderbook of 8.72 million grt or 144 vessels. This compares with orders for 77 ships of 3.03 million grt secured in the first nine months of 1996.
Japan Japan's NYK has placed orders with three Japanese shipbuilders for the construction of five 6,000 capacity car carriers in contracts estimated to be worth close to $300 million. Two of the five ships have been placed with Imabari, with scheduled delivery dates in July and October 1999. These will be followed by two from Shin Kurushima Dockyard. Kanasashi Shipbuilding, based in Shimizu, eastern Japan, is believed to have secured the contract for the fifth ship, with a delivery date of October 1999.
NYK is also negotiating with Oshima Shipbuilding for the possible construction of two 77,000-dwt bulkers of a shallow draft configuration. The design will have a length of 738 ft. (225 m) and will feature a draft of 42 ft. (12.8 m). This compares with a draft of 45.2 ft. (13.8 m) found on most conventional Panamax designs. The vessels' beam will also be significantly increased to 118 ft. (36 m). London listed Ugland International Holdings has exercised one of two options for a large vehicle carrier at Tsuneishi Shipyard. The 6,100 car-carrying capacity ship will be an identical sistership to the newbuilding contracted with Tsuneishi in June this year. Contracted at a price of $54 million, the vessel has a scheduled delivery date of December 2000.
Ugland has until December this year to exercise the remaining option for a third similar car carrier for delivery in 2000.
Contracts for five Handysize bulkers worth $100 million have been won by Mitsui Engineering and Shipbuilding (MES) from Polska Zegluga Morska (Polish Steamship Company) as part of a fleet renewal program. The five 34,600-dwt vessels are destined to operate between Europe and the North American lakes, and as such are to be configured with a narrow breadth. Deliveries are due to commence in early 1999.
Tanker firm MIF has taken a further step in the expansion of its fleet by signing an agreement with a Japanese shipbuilder for a second Aframax newbuilding.
Construction of the double-hulled vessel is well advanced at the Imabari Shipyard and delivery is scheduled for the first quarter of next year. The new vessel will be a sistership to the 107,000 dwt tanker MIF received from the same shipyard at the end of June. South Korea A big advance in productivity provides the backdrop to an increased newbuilding order intake by Daewoo Heavy Industries (DHI) this year. Formalization of contracts spanning 35 ships has already topped the figure achieved for the whole of 1996.
It is anticipated that new work generated this year will total 40 ships worth around $2.5 billion. While the South Korean company secured a 13 percent gain in productivity at its Okpo shipyard last year, it now expects to achieve a further step up of about 21 percent for 1997 against the 15 percent targeted in the annual plan.
The joint venture formed by the tanker interests of Helmut Sohmen has ordered further VLCC tonnage, exercising an option for a 3,000 dwt tanker at DHI. Formed specifically for ordering VLCC tonnage, the joint venture comprises World Wide Shipping, Argonaut and Nordstrom & Thulin (N&T). The ship is expected to be delivered in the second quarter of 2000.
DHI has consolidated its position in the vehicle carrier market through a further deal with Sweden's Wallenius Lines involving high capacity newbuildings.
The contract for two vessels offering stowage for 5,850 cars is highly significant from the standpoint of the yard's stability to attract repeat business from a blue chip client.
DHI has also secured its first floating production, storage and offloading (FPSO)vessel order, marking a significant breakthrough in its attempt to enter the sector. DHI will construct the hull of the FPSO vessel for the Terra Nova oilfield off Newfoundland. The company has won the contract for the Terra Nova Alliance, a consortium responsible for the design and construction of the facility and subsea components for developing the field. Construction is scheduled to begin in August 1998 and delivery of the hull from DHI's Okpo yard is due in January 2000. Danish shipping company AP Moller is believed to have entrust ed its latest investment in VLCC tonnage to Hyundai Heavy Industries (HHI) in a deal thought to be worth $164 million involving four vessels of two million barrels capacity. Delivery for the first 300,000-dwt vessel is scheduled for the first half of 2000.
Meanwhile, HHI has won a fifth VLCC order from Frontline. The order was placed by Norwegian shipowner John Fredriksen who now controls Frontline. A spokesperson for Mr. Fredriksen declined to comment on the contract price for the VLCC, which is due to be delivered in two years, but newbuilding analysts in London's sale and purchase brokers estimated the cost at around $82 million, in line with the four ships already on order from the yard.
Ranking as the first contract awarded by the Hong Kong shipowning community to the world's largest shipbuilder since the return of the territory to China, Wah Kwong has ordered a capesize bulker from HHI. The 171,000-dwt newbuilding commanded a price of $43 million and is due for delivery in April 1999. HHI's drive into the more capital intensive sector of the offshore industry has been boosted by a newbuilding contract for a third innovative ultra deepwater dynamically positioned drillship. The order, placed by U.S. drilling contractor Reading & Bates, has been undertaken on the back of a commitment from Norwegian state energy group Statoil to provide two and a half years' employment for the drillship over a five year period. Singapore based Tai Chong Cheang Steamship (TCC) has strengthened its contractual links /ith Halla Engineering & Heavy ndustries (HEHI) by ordering a 105,000-dwt crude carrier, plus an ption on a second vessel, both of hich must be delivered before the nd of September 1999. Exercising he option would take the overall alue of the project to around $82 illion.
Heidenreich Marine has ordered our Panamax size tankers which re specifically designed for use on raft restricted ports. The conracts for the 67,000-dwt vessels as been awarded to HEHI. All our tankers are scheduled for elivery in 1999.
HEHI has also secured orders for our 46,000 dwt products carriers rom Danish and Singapore interests. Estimated to be worth $128 million, the contract calls for two pairs, one plus one option, of Handysize products tankers for Denmark's Trom Lines and Pacific Carriers of Singapore.
China Among orders for Chinese yards: Nantong Ocean Ship Engineering Company (NOSECO), the joint venture between Japan's Kawasaki Heavy Industries (KHI) and Cosco, is to begin construction of its first Handysize bulk carrier next month. A spokesman for KHI confirmed that the first group of Chinese engineers, who had been receiving training at the company's Kobe and Sakaide shipyards since the spring of last year, would return to Nantong by this weekend to undertake preliminary work. A second-hand, 639.7 ft. (195 m) long, 15,000 ton lifting capacity dock has been acquired for the Bohai Sembawang Shipyard China, as part of the shipyard's expansion program. The yard, a joint venture between Singapore's Sembawang Shipyard and China Offshore Oil Bohai Corp., is situated in Tangu, in the vicinity of Tianjin Port, along the coastline of the Bohai Sea.
Singapore Keppel Singmarine dockyard in Singapore has won a second order worth around $66 million to build two anchor handling tug supply (AHTS) vessels for the AP Moller group of Denmark. This follows AP Moller's decision to exercise two options that were included in an earlier contract for the building of its first two AHTS ships. Under the contract, Singmarine, which is part of Keppel Marine Industries, will once again provide engineering design in addition to the construction. Delivery is set for 1999.
Labroy Marine has won a $25 million contract from Singapore On the flnnivefsflf^ of Sentcsfl's I n n f l f ^ t Set*vices, w e ' f e giving cur custcners fl ccvpie cf reflscns tc ce(ebf*4te. One, our Singapore Sentosa Land Earth Station now offers global coverage with Inmarsat-B, Inmarsat-B High Speed Data, Inmarsat-M and MPLUS services. The Access Code is 210 for all four services worldwide. And they will function alongside the existing Inmarsat-A service (which is also available globally), and Inmarsat-C (available in P0R/I0R). Sentosa LES Access Codes Ocean Region P0R I0R A0R-E A 0 R -W Inmarsat-A 10 13-5 13-5 10 I n m a r s a t - B / M / M P i l /S 210 210 210 210 Inmarsat-C 210 328 - - And, more importantly, two, we have also reduced the rates for all our services by as much as 50% such that they are arguably the lowest in the world. So take advantage of our improved charge bands, cost savings, competence and commitment more than ever. Call on Sentosa Land Earth Station for your Inmarsat answers today. And join in the celebrations. For proper A c c e s s Procedures to Sentosa (nmarsat- A service in I0R/A0R-E (Access Codes 13-5). please contact Sentosa Customer Service Centre.
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Taiwan The Restis family group, a leading operator of reefer vessels, has embarked on a major diversification by placing a shipbuilding order in Taiwan for four Panamax dry bulkers, worth $116 million. The group also disclosed that it is launching a separate company, Modern Shipping, to handle its new interest in the dry bulk trades. The four initial bulkers of 73,000 dwt are to be built in China Shipbuilding Corp.'s (CSBC) Kaoshiung Shipyard at a total cost of $116 million. All are due for delivery in the second half of 1999. Yangming Marine Transport is proposing a new phase of liner fleet investment entailing post panamax containerships. It is understood that the state owned carrier is considering a series of five newbuildings with a unit capacity in excess of 5,000 TEU, with CSBC favored to win the order.
