Affected by the continual downturn of the global shipping market, China's three major shipbuilding indicators have fallen year on year with gross industrial output and other major economic indicators dropping sharply. According to insiders, many companies haven’t received any new orders so it’s very likely that more companies will have no vessel to build in the coming years and the shipping industry will witness more bankruptcy and restructuring.
Statistics released by China Shipbuilding Industry Association show that from January to October this year, delivered new ships in the country totaled 28.21 million deadweight tons, down 14.2% over the previous year; the received new ship orders amounted to 18.83 million dwt, down 7.6%; while orders in hand registered 106.02 million dwt at the end of October, down 20.6%.
We cannot see too much "chill" from the figures, but the shipbuilders are seriously differentiated. Statistics from China Shipbuilding Industry Association show that from January to October, 51 key monitored shipbuilders delivered 26.46 million dwt ships, accounting for 94% of the national output; the new ship orders received by them reached 17.25 million deadweight tons, making up 92% of the total, and the orders in hand were 103.21 million dwt at the end of October, accounting for 97%. Other shipyards except these 51 enterprises hardly had any vessels to build or any orders to take.
Zhang Tao, deputy general manager of the Yangtze River Shipping Industry, said that it was challenging to complete one third of this year’s goal and the situation would not get better next year, so the pressure could be huge if it remains the same the year after. The company has developed rigid layoff indicators based on the “bottom 5% out” system, and the company plans to make another 2,000 employees redundancy by the end of this year following last year's cut of 6,000 workers.
Xin Guobin, vice minister of MIIT, said that the current global shipping industry is facing the most severe period since the Financial Crisis. On the one hand, the demand of international shipping market dropped sharply, and severe overcapacity in the shipping market and shipbuilding market is unlikely to get radically improved in the short term, so the market demand situation remains tough. On the other hand, the global shipbuilding industry ran into difficulties. Except the European shipbuilding industry who promote its market share by virtue of their advantages in areas such as luxury cruise ships, other major shipbuilding countries like Japan and South Korea are struggling to survive.
Industry insiders widely believe that it is inevitable for the domestic shipbuilders to integrate and restructure themselves since the shipbuilding industry may remain stagnant.