Rich Owners’ World?
In 2016 to date, 419 newbuild contracts of an estimated $30.9bn have been reported. Year-on-year, newbuild contract investment levels are down by 63% with around 90 owners reported to have placed an order in the year to date compared to 437 companies over the same period of 2015. The top 10 owner countries, ranked by estimated contract investment in the year to date, account for 82% of orders in value terms and several of these owner countries have invested more than during 2015.
Hey Big Cruise Spenders
Cruise ship orders account for around half of estimated global newbuild investment in 2016 so far and strong ordering activity in this high-value sector has been a common theme amongst the top investor nations in the year to date. US owners are reported to have invested the most in new orders in 2016 so far, an estimated $7.5bn, 92% of which is accounted for by cruise ships. However, Malaysian, UK and Italian owners also appear amongst the top investors due to strong cruise ship ordering. Malaysian newbuild investment in 2016 to date is over six times higher than in full year 2015 while the UK’s Virgin Voyages has placed its first ever cruise order. Further, French owner Ponant’s four cruise orders account for 76% of total estimated French investment in 2016 so far. Despite placing only 45 orders between them, these five owner countries account for 51% of estimated global investment in the year to date with the value of contracts placed averaging around $350m per unit.
Spend A Little Less Elsewhere
More ‘traditional’ investor countries have accounted for some activity in the newbuild market in 2016 so far, though of course contracting levels have declined very significantly year-on-year. Chinese owners have invested the second largest amount, an estimated $4bn. Most of these orders were placed by state affiliated companies and all reported investment has been domestic, supporting Chinese yards in an extremely difficult market. Meanwhile, Greek and Japanese owners rank 6th and 7th globally in terms of contract investment in 2016 to date. As in China, domestic yards received nearly all of the Japanese investment. Elsewhere, while tankers account for 49% of Norwegian orders in value terms in 2016 so far, owners here have also invested in the ‘niche’ ferry and Ro-Ro sectors where market conditions are more positive.
Overall, weak market conditions in the major volume sectors have limited ordering in 2016 so far and newbuilding investment trends have been heavily influenced by cruise ship ordering. Contracting activity across the more traditional owner nations has been very subdued in 2016 to date and, with cruise ship owning nations featuring high in the rankings, the leading investor countries reflect these trends.
