Forum for Shipping Økonomi og Strategi

28. Februar 2008

The Newbuilding Market

Theory, Tendencies and Projections

Erik Bastiansen
MSR-Consult

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 1

Contents of Presentation

• History and Current Situation

• Long-term newbuilding requirement 2008-2023

• Medium-term newbuilding market outlook 2008-14

• The geographical distribution of shipbuilding

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 2

1
 mDWT
World Newbuilding Orde ring 1970-2006
Sources: Fearnley's, Lloyd's Register-Fairplay, Clarkson Research Studies & MSR

Demand for Newbuildings

Ships
250,0 5000

225,0 4500
1970-2007 200,0 4000

175,0 3500

• Boom in 1970-73 and in 2003- 150,0 3000

125,0 2500
07: 100,0 2000
75,0 1500
• Maximum values 1970s/2000s 50,0 1000

of contracts/year: 25,0 500

0,0 0
– 2,070 / 3,900 ships 1970 1975 1980 1985 1990 1995 2000 2005
DWT (Left Scale) No. of Ships (Right Scale)
– 129½ / 242½ mDWT World Ne wbuilding Orderbook 1970-2007
mDWT Sources: Fearnley's, LR-Fairplay, Clarkson Research Studies, & M SR Ships
– 37 /79 mCGT 600,0 12000

• Maximum values 200s/2000s 500,0 10000

of world orderbook: 400,0 8000

– 3,100 / 8,800 ships 300,0 6000

– 242½ / 507 mDWT 200,0 4000

– 64½ / 178 mCGT 100,0 2000

0,0 0
1970 1975 1980 1985 1990 1995 2000 2005

DWT (Left Scale) No. of Ships (Right Scale)

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 3

World Fleet 1970-2007

mDWT
Sources: Fearnley's, LR-Fairplay, Clarkson Research Studies, & MSR Ships

Increasing World Fleet 1.600

1.400
40.000

35.000

1970-2007 1.200 30.000

1.000 25.000
• The World Fleet 1970/2007: 800 20.000

– 18,400 / 36,500 ships 600 15.000

400 10.000
– 321 / 1,115 mDWT 200 5.000

– 144½ / 500 mCGT 0 0

1970 1975 1980 1985 1990 1995 2000 2005

• Growth Factor (% p.a.) 1970- DWT (Left Scale) No. of Ships (Right Scale)

2007: World Orderbook In Percent of World Fleet 1970-2007

Sources: Fearnley's, LR-Fairplay, Clarkson Research Studies, & MSR
– Ships: 2.0 (1.8%) Percent
60,0

– DWT: 3,5 (3.3%) 50,0

– CGT: 3,5 (3.3%) 40,0

30,0
• World orderbook in % of DWT 20,0
of the Fleet: 10,0

– 1973: 55% 0,0

1970 1975 1980 1985 1990 1995 2000 2005
– 2007: 45½% Percent of DWT

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 4

2
Current Orderbook In % of the Fleet By Segment

Orderbook In % of Fleet (Tonnage)

Data as per January 1st, 2008
Sources: Clarkson Research Services & MSR-Consult
LNG Carrie rs 68
Containe r Vessels 60
Dry Bulk Carrie rs 58
Chemical Tanke rs 54
Oil Product Tanke rs 48
Offshore Vessels 40
LPG Carrie rs 38
Crude Oil Tanke rs 37
Car Carrie rs 36
Semi-Containe r Vessels 32
Cruise Vessels 31
Roro Cargo Carrie rs 11
Misce llaneous Tanke rs 11
Passenger Ships 10
FPSOs 6
Other Ge ne ral Cargo Ships 5
Misce llaneous Type s 4
Reefer Ships 3
0 10 20 30 40 50 60 70 80
New Co ntracting .XLS

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 5

Total Newbuilding Market, No. of Ships

No. Monthly Contracting

Current Newbuilding Market 4500

4000

Boom 2003-2007, No. of Ships 3500

3000

2500

2000
• Total Contracting: 1500

– Turning-point in 2001/02 1000

500
– Strong upturn in 2002 0
2003 2004 2005 2006 2007 2008
– Strong ordering of 2,000+ 7 M onth Average Actual Recorded

Ships 2003-07 The Newbuilding Market By Main Ship Type

No. 7 Months Moving Averages. Ship of 2,000+ DWT or GT
• By Ship Type Segment: 2000

1800
– Strong ordering in periods in 1600

almost all segments 1400

1200

1000
800

600
400

200
0
2003 2004 2005 2006 2007 2008
All Tankers Bulk Carriers Container/GC Other Types

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 6

3
 Total Newbuilding Market, Mill. CGT
Mill. CGT
Monthly Contracting
100,0
Current Newbuilding Market 90,0
80,0
Boom 2003-07, CGT 70,0
60,0
50,0

• Follow the same tendencies 40,0

30,0
as the number of ships 20,0
10,0
• The relative movement are, 0,0
2003 2004 2005 2006 2007 2008
however, larger 7 M ont hs Average A ctual Recorded

The Newbuilding Market By Main Ship Type

7 months moving averages. Ships of 2,000+ DWT or GT
Mill. CGT
40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0
2003 2004 2005 2006 2007 2008
All Tankers Bulk Carriers Container/GC Other Types

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 7

NB! Direct Link

General Freight Market Earnings, US$/Day

Oil Tankers, Dry Bulk Carriers, Gas Carriers and Container Ships

ClarkSea Index, USD/Day

Monthly Average Earnings In the Major Shipping Segments
US$/Day Sources: Clarkson Research Studies and MSR-Consult

60.000

50.000

40.000

30.000 !Latest week

22-02-2008
20.000

10.000

0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 8

4
The Current Newbuilding Market Boom
Back Ground
• Outsourcing and globalisation
• The 3rd world countries are gaining weight
• Strong cyclic upturn in the world economy from 2001/02
• Long-term adjustment of the fleet to demand
• Exceptionally strong freight market conditions
• Underlying replacement cycle and S/H to D/H oil tanker
replacement
• Low and declining interest rate and easy access to
finance
• Very strong market sentiment
• Moderate and moderately increasing newbuilding prices
• Influx of newcomers in shipping and shipbuilding

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 15

Long-Term Newbuilding Requirement 2008-23

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 16

5
 Overview of Forecast Process

• Scenario and trends of the world economy

• World seaborne trade trends by commodity
• Tonnage requirement trends by ship type and size-range
• Long-term newbuilding requirement
– Decommissioning of tonnage by ship type and size-range
• Age profile of fleet segment
• Average lifetime
• Life expectancy distribution
– Replacement tonnage: Productivity improvements, upsizing,
and ”substitution”
– Fleet increase requirement by ship type and size-range

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 17

Long-Term Requirement 2008-23: An Example

Dry Bulk Carrier Decommissioning
30,00 Age Profile - Bulk Carriers, mDWT
mDWT
25,00
30,0
20,00

15,00 25,0
10,00

5,00
20,0

0,00
1972 1977 1982 1987 1992 1997 2002
Very Small small Medium Large
2007 15,0
The De commissioning Frequency Function
Percent Corresponding to an average lifetime of 25 Years
15,00
10,0
12,00

9,00
5,0
6,00

0,0
3,00

1988 1993 1998 2003 2008 2013 2018 2023

0,00
0 5 10 15 20 25 30 35 40 History Estimate Base Case
Age of a ship
Sources: MSR-Consult & LR-Fairplay Low Case High Case

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 18

6
 Long-Term Requirement 2008-23: An Example
Dry Bulk Trades 1965-2025
Seaborne Trade, Iron Ore, Bill. TonMiles Seaborne Trade, Grain, Bill. TonMiles Seaborne Trade, Minor Bulk, Bill. TonMiles
Sources: Fearnley's, CRS & MSR Sources: Fearnley's, CRS & MSR Sources: Fearnley's, CRS & MSR
8.000 1.600 6.000

7.000 1.400
5.000
6.000 1.200
4.000
5.000 1.000
4.000 800 3.000
3.000 600
2.000
2.000 400
1.000
1.000 200
0 0 0
1965
1970

1975
1980
1985
1990

1995
2000
2005
2010
2015

2020
2025

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

1965

1970

1975

1980

1985

1990
1995

2000

2005
2010

2015
2020

2025
Recorded T rend Recorded Trend Recorded T rend

Seaborne Trade, Coal, Bill. TonMiles Seaborne Trade, BAPhR, Bill. TonMiles Seaborne Trade, All Bulk, Bill. TonMiles
Sources: Fearnley's, CRS & MSR Sources: Fearnley's, CRS & MSR Sources: Fearnley's, CRS & MSR
7.000 500 25.000
450
6.000
400 20.000
5.000 350
300 15.000
4.000
250
3.000 200 10.000
2.000 150
100 5.000
1.000
50
0 0 0
1965
1970
1975
1980
1985

1990
1995
2000

2005
2010
2015
2020
2025

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

1965

1970

1975
1980

1985
1990

1995

2000
2005

2010
2015

2020

2025
Recorded T rend Recorded T rend Recorded T rend

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 19

Long-Term Requirement 2008-23: Results

Forecast Growth Rates By Segment, % of Tonnage
Scenarios
Ship Types Reference High Growth Low Growth
Crude Oil Tankers 2,7 3,7 2,2
Oil Product Tankers 3,9 4,9 3,4
Chemical Tankers 4,0 5,0 3,5
FPSOs 6,0 7,5 5,5
Miscellaneous Tankers 1,0 1,5 0,5
LPG Carriers 4,2 5,2 3,7
LNG Carriers 9,6 12,6 7,6
Container Vessels 6,5 7,9 5,5
Semi-Container Vessels 1,7 2,2 0,7
Reefer Ships -1,5 -1,0 -3,0
Roro Cargo Carriers 2,6 3,6 1,6
Car Carriers 5,6 7,6 4,6
Other General Cargo Ships -4,5 -3,5 -5,5
Dry Bulk Carriers 3,2 4,2 2,2
Passenger Ships 2,2 2,7 1,7
Cruise Vessels 7,5 8,5 6,0
Offshore Vessels 4,4 4,9 3,4
Miscellaneous Types 1,3 1,8 0,8

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 20

7
 Long-Term Requirement 2008-23: Results
Annual Deliveries in CGT
Total Newbuilding Requirement, Mill. CGT
M il l. C GT So urces : M SR-Co ns ult and Clarks o n Res earch St ud ies

50

40

30

20

10

0
1978 1983 1988 1993 1998 2003 2008 2013 2018 2023
Delivered Orders 01-02-08 Re pla ce m ent
To tal R equirem e nt R eference S ce na rio Lo w Gro wth S c enario
High Gro wth S ce na rio F le et Inc re as e R equirem e nt

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 21

Long-Term Requirement 2008-23: Results

Annual Deliveries In No. of Ships
Total Newbuilding Requirement, No. Of Ships
N o . Of S hi p s So urces : MSR-Co ns ult and Clarks o n Res earch Stud ies

3000

2500

2000

1500

1000

500

0
1978 1983 1988 1993 1998 2003 2008 2013 2018 2023
De live re d Orde rs 01-02-08 R e pla c e m e nt
To ta l R e quire m e nt F le e t Inc re a s e R e quire m e nt R e fe re nc e S c e na rio
Lo w Gro wth S c e nario High Gro wth S c e na rio

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 22

8
 Medium-Term Newbuilding Demand 2008-14

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 23

Overview of Medium-Term Forecast Process

• Objectives: To forecast the medium term cycles and yearly

magnitude of global and regional contracting

• Segmentation:
– Segmentation by major commodity – and thus by major ship
type.
– Segmentation of the major ship types by size-ranges: 18 types
and 58 size-ranges

• ”Side Benefits”:
– “Conversion” of forecast results for other uses

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 24

9
 Overview of Medium-Term Forecast Process

• The ”corner stone”: A supply/demand-model for each

freight market segment.
– Historical fleet supply
– Historical tonnage demand, a trend projection, and cycles in
demand
– The current market balance
– Forecast: Feed-back simulation quarter by quarter:
• Future decommissioning and contracting
• Consequential deliveries
• Freight market balance
– Limitations to the freight market models

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 25

Overview of Medium-Term Forecast Process

• Control variables:
– Long term trends in decommissioning
– Long term newbuilding requirement
– A consistent picture of the freight market balance, i.e. the
supply/demand balance ???

• Key parameters – and thus the sources of major

uncertainties:
– The growth in the trend of tonnage demand
– The cyclic development of tonnage demand
– Market sentiment

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 26

10
 Overview of Medium-Term Forecast Process

• Other uncertainties and limitations:

– Technical problems:
• Data limitations and quality
• Ship type classification
• Interconnection/substitution between segments
• Delivery time modelling
– Contracting, a marginal effect.
– Planning horizons/delivery times.
– The micro-picture of shipowners contra the macro-picture of
the world fleet
– The dynamics in the market.

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 27

Medium-Term Demand: An Example

Dry Bulk Carrier Freight Market
Base Case
Deviation From the Trend, Bulk Carrier, Base Case
Sources: M SR-Consult
Number
1,2 mDWT
1,15 700,0
1,1 History Forecast
1,05

1
600,0
0,95

0,9 500,0
0,85

0,8
1990 1995 2000 2005 2010 400,0
Trend De viation From Tre nd

Bulk Carrier Earnings

300,0
Monthly Average of Spot Market Earnings, USD/Day
Sources: Clarkson Research St udies and MSR-Consult

70000 200,0
60000

50000 100,0
40000

30000
0,0
20000
1996 1999 2002 2005 2008 2011 2014
10000
Fleet Demand-trend
0 Demand-Actual Demand ex. Congestion
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 28

11
 Medium-Term Demand: An Example
Dry Bulk Carrier Freight Market
High Case

Deviation From the Trend, Bulk Carrier, High Case

Number
1,2
Sources: MSR-Consult
mDWT
1,15
700,0
1,1 History Forecast
1,05

1
600,0
0,95

0,9
500,0
0,85

0,8
1990 1995 2000 2005 2010
Trend Deviation From Trend 400,0

Bulk Carrier Earnings

Monthly Average of Spot Market Earnings, USD/Day 300,0
Sources: Clarkson Research Studies and MSR-Consult

70000

60000 200,0
50000

40000
100,0
30000

20000
0,0
10000

0
1996 1999 2002 2005 2008 2011 2014
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fleet Demand-trend Demand-actual

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 29

Medium-Term Demand: An Example

Dry Bulk Carrier Contracting and Decommissioning
Base Case

Contracting Decommissioning
mDWT mDWT
150,0
History Forecast 60,0
History Forecast
125,0
50,0

100,0
40,0

75,0
30,0

50,0
20,0

25,0 10,0

0,0 0,0
1996 1999 2002 2005 2008 2011 1996 1999 2002 2005 2008 2011
Very Small Small Medium Large Very Small Small Medium Large

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 30

12
 Medium-Term Demand: An Example
Dry Bulk Carrier Fleet Changes
Base Case
Fleet Changes, Dry Bulk Carriers - Base Case
Mill. DWT/Q rt S o u rc e s : MS R- Co n s u lt a n d Cla rks o n Re s e a rc h S e rvic e s Pct. P.A
24,0 12,0

18,0 9,0

12,0 6,0

6,0 3,0

0,0 0,0

-6,0 -3,0

-12,0 -6,0

-18,0 -9,0
2005 2006 2007 2008 2009 2010 2011 2012
Delivered Orders as per 01-02-08
New Contracts (010107) Recycling
Fleet Growth, % (Right) Demand Growth (Right)

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 31

Medium-Term Newbuilding Market Outlook

2008-14

Forecast from September 2007

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 37

13
Medium-Term Outlook – Two Cases - Contracting
Alternative Cases - Quarterly Contracting - S hips/Year
No . Of
3 Qu a rt e rs M o v in g A v e ra g e
S hips
So urc e s : MS R -C o ns ult a nd C la rks o n R e s e a rc h Se rvic e s
4500
4000
3500
3000
2500
2000
1500
1000
500
0
1996,1 1999,1 2002,1 2005,1 2008,1 2011,1

Recession Case Reference Case

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 38

Medium-Term Outlook – Recession Case - Contracting

Number Recession Case - Yearly Contracting, No. Of Ships
of Ships So urces : MSR-Co ns ult and Clarks o n Res earch Stud ies

4000
History Forecast
3500

3000

2500

2000

1500

1000

500

0
1996 1999 2002 2005 2008 2011

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 39

14
 Overview of Forecast Process
Converting Contracting Rates to Delivery Rates

• Delivery times for ships depends on

– Size and type of ship
– Availability of shipbuilding capacity (dock- or building
positions)
– Planning- and “speculative” factors

• Two ways of calculation are used:

– Fixed distributions per ship type and size-range depicting the
current situation, i.e. the freight market model: “Owners View”
– Yard capacity availability on a broad-based ship type
grouping, i.e. the shipyard model: “Yards View” [not shown]

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 40

Medium-Term Outlook – Recession Case – Deliveries - CGT

Million Historic & Future Total Deliveries, Mill. CGT

CGT So urces: M SR-Co nsult and Clarkso n Res earch Services
60
History Forecast

50

40

30

20

10

0
1996 1999 2002 2005 2008 2011 2014
Allre a dy De livered O-B o o k 01-02-08
F o re c as t Delive ries M a cro P ic ture , Owners

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 41

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Medium-Term Outlook – Recession Case – Deliveries - Ships
No. of
S hips
Historic & Future Total Deliveries, No. Of Ships
So urces : M SR-Co ns ult and Clarks o n Res earch Services
3000
History Forecast

2500

2000

1500

1000

500

0
1996 1999 2002 2005 2008 2011 2014
Allre a dy De live re d O-B o o k 01-02-08
F o re c a s t De live rie s M a c ro P ic ture , Owne rs

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 42

Average Delivery Times By Yard Country/Area

Ave rage De live ry Time s Ove r Time , Ye ars

5 quarters moving average
Ye ars S o u rc e s : Cla rks o n Re s e a rc h S e rvic e s & MS R- Co n s u lt

3,50

3,25

3,00

2,75

2,50

2,25

2,00

1,75

Year and Q uarte r of C on tractin g

1,50
1999,1 2000,1 2001,1 2002,1 2003,1 2004,1 2005,1 2006,1 2007,1

Global Japan South Korea China Europe

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 43

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 Geographical Distribution of Shipbuilding

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 44

Overview of Forecast Process

Geographical Distribution of Shipbuilding

• Long-Term Trends and Forecasts of capacity and market

shares

• Medium-Term Forecast:
– Orders and new contracting by year and ship type groups.
– Shipbuilding capacity:
• Individual yards (60.000+ DWT or 250+ meters LOA)
• Medium yards by country (10,000-60,000 DWT or 140-250 meters
LOA)
• Small yards by country (2,000-10,000 DWT or up to 140 meters
LOA)
– Historical market shares by ship type group
– Current overall relative competitiveness

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 45

17
 Geographical Distribution - Conclusions

• Main parameters influencing competitiveness:

– Cost-structure and Cost-competitiveness in US Dollar
– Shipbuilding capacity, current booking, and delivery times
– Local infra-structure re. design, equipment, etc.
– Local tonnage demand, regulations, financial support etc.

• Forward calculations: A likely picture of market shares,

production and capacity utilisation

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 46

Geographical Distribution In Shipbuilding

Long-Term Trends: Total World
Long Term Trends In Market Shares
Percent of CGT, Analytically derived from trend-points
Sources: MSR-Consult and Clarkson Research Studies
100,0

90,0

80,0

70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Japan South Korea China Europe Other World

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 50

18
 Geographical Distribution – Shipbuilding Capacity
Mill. CGT/Year and Percent Increase 2006 to 2012

Year All
Japan Korea China Europe Others Total
2005 9,0 9,5 4,5 8,0 3,0 34,0
2006 10,0 10,5 5,5 8,5 3,5 38,0
2007 10,5 11,5 7,5 9,0 4,0 42,5
2008 10,5 14,0 9,0 9,0 4,5 47,0
2009 10,5 16,0 12,5 9,0 5,0 53,0
2010 10,0 17,5 15,5 8,0 5,5 56,5
2011 7,5 17,5 16,0 7,0 4,0 52,0
2012 6,5 17,5 17,0 6,0 4,0 51,0
% 2006-2012 -35,0 66,7 209,1 -29,4 14,3 34,2

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 51

NB! Direct Link

Geographical Distribution: China

Mill. CGT Contracting, Chinese Yards M i ll . C G T Chinese Yards

36,0 21
32,0
18
28,0
15
24,0
20,0 12
16,0 9
12,0
6
8,0
3
4,0
0,0 0
2003 2004 2005 2006 2007 2008 2001 2003 2005 2007 2009 2011
Contracting Deliveries
7 Months Moving Average Actual Recorded On Order Current Capacity

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 52

19
NB! Direct Link

Geographical Distribution: South Korea

Mill. CGT Contracting, South Korean Yards M i ll . C G T South Korean Yards

45,0
24
40,0
35,0
20
30,0 16
25,0
12
20,0
15,0 8
10,0
4
5,0
0,0 0
2003 2004 2005 2006 2007 2008 2001 2003 2005 2007 2009 2011
Cont racting Deliveries
7 Months Moving Average Actual Recorded On Order Current Capacity

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 53

NB! Direct Link

Geographical Distribution: Japan

Mill. CGT Contracting, Japane se Yards M ill. C GT Japanese Yards

20,0
16
14
16,0
12
12,0 10
8
8,0 6
4
4,0
2
0,0 0
2003 2004 2005 2006 2007 2008 2001 2003 2005 2007 2009 2011
Contracting Deliveries
7 Months Moving Average Actual Recorded On Order Current Capacity

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 54

20
NB! Direct Link

Geographical Distribution: Europe

Mill. CGT Contracting, Europe an Yards M i l l. C GT European Yards

15,0 10
9
12,0 8
7
9,0 6
5
6,0 4
3
3,0
2
1
0
0,0
2003 2004 2005 2006 2007 2008
2001 2003 2005 2007 2009 2011
Contracting Deliveries
7 Months Moving Average Actual Recorded On Order Current Capacity

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 55

NB! Direct Link

Geographical Distribution: World

M ill . C G T World Shipyards

Pct. Market Shares, Deliveries, Pct. of CGT
70,0
45,0
60,0 40,0

50,0 35,0

30,0
40,0
25,0
30,0
20,0
20,0 15,0

10,0 10,0

5,0
0,0
2001 2003 2005 2007 2009 2011 0,0
Contracting Deliveries 1999 2001 2003 2005 2007 2009 2011
On Order Current Capacity Japan Korea All Europe China

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 56

21
NB! Direct Link

Geographical Distribution: World

Market Shares of Major Yard Countries/Areas
Percent Percent of CGT
of CGT Sources: MSR-Consult and Clarkson Research Studies
100,0
Other World

Eastern Europe
80,0

Western Europe
China
60,0

South Korea
40,0

20,0 Japan

0,0
1970 1975 1980 1985 1990 1995 2000 2005 2010

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 57

Newbuilding Prices

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 58

22
 Overview of Forecast Process
Medium-Term Newbuilding Price Forecast
Index
• Model Factors: 1990=100
Recorded and Estimated Newbuilding Price Index
140,0
– Shipbuilding
capacity 120,0

– Orderbook 100,0

– Relative 80,0
competitiveness
60,0
• Steel prices
• Labour costs 40,0

• Productivity gains 20,0

• Exchange rates
0,0
• Import share 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Model Values Recorded

Source: MSR-Consult

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 59

NB! Direct Link

Newbuilding Prices, US$-Index

End-Year Prices

US Do llar
Newbuilding Prices 1975-2010 Newbuilding Prices 1975-2007
Ind ex US Dollar Index, 1990=100, At Year-End Currency Adjustet Index, 1990=100, At Year-End
So urces : M SR-Co nsuls, Fearnley's & Clarks o n Research Stud ies Index So urces : Fearnleys, Clarks o n, & M SR-Co nsult
140
140
120
120
100
100
80
80
60
60
40 40
20 20
0 0
1975 1980 1985 1990 1995 2000 2005 2010 1975 1980 1985 1990 1995 2000 2005

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 60

23
 Medium-Term Outlook
• The demand for newbuildings will continue on a strong
note in the very short-term
• Strong ups and downs in the demand for individual types of
ships will be seen
• A declining tendency is regarded as most likely or even
inevitable over the next quarters.
• The speed of decline depends on the economic
development and market sentiment.
• When (or if) the turning point is reached, a major downturn
in the ordering of newbuildings and an upturn in
decommissioning are forecast

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 61

Medium-Term Outlook
• Cancellations and some changing of ship type of current
orders
• The timing and magnitudes are uncertain
• The stronger the downturn the stronger the following
upturn
• Newbuilding prices will start to decline and drop to a low
level
• Some shipyard expansion projects will be dropped or
scaled down
• A shipbuilding industry crisis will develop as orderbooks
are run down

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 62

24
 Medium-Term Outlook
• Chinese and Korean will gain market shares
• Japanese and European shipbuilding will loos market
shares
• Certain up-coming shipbuilding nations may curtail their
ambitions

MSR-Consult ApS
Maritime Systems Research CBS Feb. 2008 : 63

25