Contracting for New Vessels Down 40 Percent

Clarkson says "for the world's shipbuilders, it might feel like a most abrupt adjustment."

Clarksons Research reports that an increase in containership ordering in 2015 was overshadowed by massive declines in offshore vessels and bulk carrier orders, resulting in new vessel contracting overall dropping by 40 percent to 1,306 units, from 2,162 in 2014.

Estimated newbuild investment fell from $113 billion to $69 billion in 2015, according to Clarksons data.

In noting that a downshift in the placement of new vessel orders might be widely viewed as a good step towards rebalancing supply and demand, Clarkson says "for the world's shipbuilders, it might feel like a most abrupt adjustment."

Tanker orders in 2015 increased by 14 percent to 424 and containership ordering increased to 224 units; however, offshore vessels fell by 73 percent to just 127 last year and bulk carrier ordering - which Clarksons points out used to be a shipbuilding mainstay - dropped by 68 percent to 250, compared to the 1,243 bulker orders placed in 2013.

However, Clarksons stresses that these and other figures are not enough to help market conditions: while overall demolition increased by 15 percent to 38.6 million deadweight tonnage in 2015, "scrap prices have remained depressed due to a surplus of Chinese steel around the world."

Additionally, although world fleet capacity growth slowed to 3.3 percent in 2015 and the number of units changing hands on the S&P market remaining steady, Clarksons says "against seaborne trade growth of 2.0 percent, this wasn't enough to stem surplus capacity in the markets in general."

Clarksons concludes that "things still look tricky" for 2016 and while the "supply side brakes" haven't yet been applied firmly enough, "it has been plenty firm enough for builders, leaving demand for new units thin on the ground, and the trend could continue."

The dry bulk market was recently described at being at an "Armageddon level" and caused Emanuele Lauro, chief executive of Scorpio Bulkers Inc., to state that "A lot of companies have gone under, and more will go under this year; we will go under if this market persists."