At the end of the year Japan boasts an orderbook of 25 million gt, its best performance since the oil shock of 1973. It may be recalled that in 1973 Japan recorded 33 million gt of new orders and that in 1974 the Japanese orderbook stood at 50 million gt, out of a world total of 120 million gt.

The level of orders contracted in 2002 surpasses 12 million gt according to the statistics of the Japanese Shipbuilders Exporters Association (JSEA). Japanese shipyards sign contracts for 201 bulk carriers, more than double last year’s figure. Japan also manage to secure 9 out of the 16 orders for LNG carriers in 2002 whilst Korea succeeded in securing 20 out of 27 last year.

Its market share increases, going from 25 % to nearly 32 % of the world orderbook.

Once again, Japanese builders are able to take advantage of the weakness of the yen compared to the dollar. The Japanese currency goes over 135 yen/$ in January before appreciating to 115 yen/$ in July.

On October 1st 2002, NKK and Hitachi merge their shipbuilding activities by creating Universal Shipbuilding Corporation (USC) and initiate the way to the first major restructuring of shipbuilding in Japan. At a time when it is important to be large enough to benefit from economies of scale, USC becomes the second largest shipbuilder in Japan with Imabari, behind Mitsubishi Heavy Industries.

IHI and Sumitomo Heavy Industries formed IHI Marine United in October 2002.

Kawasaki Heavy Industries makes their shipbuilding an affiliated company, which could allow mergers with other shipyards in the near future.

In 2002, Korea keeps its first place as world shipbuilder with 31 million gt. They announce to have exceeded $10 billion in exports in 2002, 33 years after having delivered their first contract, a fishing boat to a Taiwanese owner.

New orders reach 13.7 million gt this year against close to 11.5 million in 2001, despite a substantial drop in the first three quarters of the year when compared to the previous year. This performance was made possible thanks to the tripling of orders in the fourth quarter, according to the statistics given by the Korean Ministry of Commerce, Industry and Energy (MOCIE). Orders placed in November and December alone represent 44 % of the total demand for the year, according to the same source.

Korea reinforces its position in sectors, which it has recently targeted. 54 of the 94 shipbuilding contracts for product tankers (MR) made in 2002 were done in Korean yards, and likewise for 16 out of 18 Suezmaxes.

The volume of new orders significantly progressed in 2002 by 22.9 %, despite a slow start to the year and the orderbook for Chinese yards increased from 7.4 million gt at the end 2001 to about 9.1 million gt one year later.

Expansion projects are nonetheless being pursued. To the 6 existing VLCC docks, the following should be added:

• Dalian New Shipyard (DNS) : a new dock (total two)

• Dalian Shipyard: one dock

• Qingdao: four docks (two for newbuilding and two for repairs)

In comparison, Japan and Korea have respectively nine and twelve VLCC docks.

DNS and NACKS have each delivered their first VLCC this year, respectively to NITC and COSCO.

Hudong-Zhonghua signed an agreement for a transfer of technology with Chantiers de l’Atlantique and should be the shipyard finally chosen to build two LNG carriers (plus an optional three) of 147,200 cbm using the GTT membrane containment system, which will supply natural gas to the province of Guangdong. Other shipyards have shown interest in the building of these ships, such as DNS, NACKS and Jiangnan – Waogaoqiao which should also take their share in this domestic market.

The Chinese orderbook increase clearly indicates their wish to rapidly achieve the 10 million tons mark, despite the revival of Japanese and South Korean competition, offering better delivery dates and benefiting from their excellent reputation.

The fixed parity of the yuan to the dollar could act as a handicap for Chinese shipyards, compared to their Japanese and Korean counterparts.

The rebirth of the China Shipbuilding shipyard, following a severe restructuring, has led to a return to profits. That yard could be privatised in 2003.
Due to a relatively light workload they were in a position to take orders for an important number of large containerships, Capesize and Panamax bulk carriers.

New orders are in sharp decline and market share of European shipyards is slowly being whittled down, going from over 11 % at the end of 2001 to 8.3 % at the end of 2002.

The striking point lays more in the decline in the orderbook of European shipyards than that of their market share. In practice, the former fluctuated within a range between 8 and 9 million tons right throughout the 90’s. This year, it went from 8.5 million tons to 6.2 million tons.

This highlights the huge difficulties of European shipbuilders when confronted with a fall in prices. These same yards were able to notch up at the end of 2000 orders up to 3 years in circumstances much more favourable than in 2002. They then combined three advantages:

• firmer levels of prices (a better economic climate and a stronger demand),

• subsidies up to 9 % of the sales price,

• a more favourable dollar/euro exchange rate in a market where ship’s values are normally expressed in dollars.

Overall conditions are quite different today.
Demand for specialised ships, which comprises a large part of European production (cruise ships, ro-ros, ferries, chemical carriers, LNG carriers) has remained weak or has been displaced towards Far Eastern yards.

Thus, the major chemical tankers operators like Stolt-Nielsen or Jo Tankers who ordered series of ships built in Europe in the 90’s, have turned towards Japanese shipyards. One should note however that European yards capable of building ships of this type are becoming more and more scarce. A large part of these orders for chemical carriers fitted with stainless steel tanks have been placed by Japanese owners, either on long-term employment with these European operators, or for domestic account. These chemical carriers have fewer tanks and segregations and generally speaking are less sophisticated than the ships ordered in the 90’s, built by European yards. But the competition is so intense today that operators are obliged to reconsider their technical preferences.

Japanese shipyards have been pursuing for a number of years a path of standardising ships, better suited for the industrialisation and thus giving a better control over costs.
  

Overall conditions are quite different today.
Demand for specialised ships, which comprises a large part of European production (cruise ships, ro-ros, ferries, chemical carriers, LNG carriers) has remained weak or has been displaced towards Far Eastern yards.

Thus, the major chemical tankers operators like Stolt-Nielsen or Jo Tankers who ordered series of ships built in Europe in the 90’s, have turned towards Japanese shipyards. One should note however that European yards capable of building ships of this type are becoming more and more scarce. A large part of these orders for chemical carriers fitted with stainless steel tanks have been placed by Japanese owners, either on long-term employment with these European operators, or for domestic account. These chemical carriers have fewer tanks and segregations and generally speaking are less sophisticated than the ships ordered in the 90’s, built by European yards. But the competition is so intense today that operators are obliged to reconsider their technical preferences.

Japanese shipyards have been pursuing for a number of years a path of standardising ships, better suited for the industrialisation and thus giving a better control over costs.

Cruise ship operators who made massive investments in 1999 and 2000 are waiting in the wings. Only three orders were placed in 2002 after only one in 2001.
European shipyards, with the exception of one, have not been able to get orders for LNG carriers despite a steady demand.

Several European shipyards have gone bankrupt or are in the process of going into liquidation : in Norway (Fosen – Mjellem & Karlsen), in Germany (Flenderwerft – SSW), in Italy (Fratelli Orlando), in Northern Ireland (Harland & Wolff), with continuation of their activities or not (Szczesin). Orskov (Denmark) announced that it will stop its newbuilding activities in the course of 2003. Others have announced partial unemployment or lays off to match their orderbooks.

The dispute between European shipyards and their Korean counterparts is still going on. The Brussels Commission has finally registered a complaint with the World Trade Organisation and has proposed to re-establish, as a temporary means of defence (awaiting the outcome of this action), subsidies for shipbuilding up to 6 % for a period of 18 months starting from October 1st 2002 for certain types of ships such as containerships, product tankers and chemical carriers.

The depreciation of the dollar against the euro of about 17 % unfortunately makes any such aid meaningless in a market largely dominated by dollar transactions.
European shipyards know today that they can only rely on themselves to survive. The strategies being adopted are various. More and more yards are trying to keep afloat by sub-contracting the construction of the hulls to East European countries or to Ukraine whilst remaining prime contractors and securing outfitting. Some shipyards like Aker, Damen, A.P. Moller have even invested in facilities in Romania, Ukraine or Lithuania. Other shipyards are counting on military orders (Izar, Fincantieri, HDW).
A further reduction in the production capacity in Europe is again foreseeable for this year.
  

• France

The shipbuilding orderbook in France has gone from 670,000 tons end 2001 to 464,000 tons end 2002.

Chantiers de l’Atlantique had no orders for cruise ships in 2002, but got the order for the construction of a LNG carrier on account of Gaz de France. This is a first to the extent that the ship’s propulsion is with a dual diesel gas-electric engine as opposed to all previous LNG carriers, which are equipped with steam-turbines. This method of propulsion offers two considerable advantages to the owner : important energy savings due to a much lower consumption and an increased cargo capacity for the same size of vessel.

Chantiers de l’Atlantique still enjoy a relatively healthy orderbook which runs through to 2004, with 5 cruise ships, a frigate for the Royal Moroccan Navy, and two LPD contracts for the DCN and the 74,000 cbm LNG carrier. In order to remain fully employed, new orders will however be necessary in 2003.

They delivered the following ships this year:

• the ‘Constellation’, a cruise ship of 1,950 passengers to Celebrity Cruises,

• the ‘European Stars’, a cruise ship of 1,506 passengers to Festival Cruises,

• the ‘Coral Princess’, a cruise ship of 1,950 passengers for P&O Princess,

• a frigate for the Royal Moroccan Navy.

Alstom Leroux Naval got an order to build a hydrographic vessel for Ifremer and a 56 m yacht for American account.

Chantiers Piriou have had orders for:

• 2 fast intervention support vessels for Surf,

• 1 versatile AHTS,

• 1 port tug for Les Abeilles.

Fincantieri was able to sign up 2 of the 3 orders for cruise ships placed in 2002 and carries an orderbook for 11 cruise ships whose deliveries extend through to 2006.

Italian owners have now turned away from their domestic shipyards and the trend towards orders in Asian yards has been amplified. More than 30 product and chemical carriers were placed by Italian interests with Korean, Chinese, or Croatian shipyards during the course of the past two years.

Several shipyards are going through difficult times. Fratelli Orlando has gone bankrupt and is looking for a takeover bid. Mario Morini was sold to a group building yachts and could get out of building of merchant ships. Mariotti and Apuania have not taken in any new orders. Visentini continues to build ro-pax for the account of its own fleet operations.

The future is full of uncertainty for Italian shipyards too.

Spain

The majority of orders placed in 2002 with Spanish shipyards were for domestic account. It was principally for ro-ros. At the end of the year, IZAR was in negotiations with a Venezuelan owner for an order for three asphalt carriers of 27,000 dwt. IZAR has succeeded entering the dredging market by importing technology from Holland and Germany.

IZAR should deliver in 2003 the first of 5 LNG carriers ordered in 2000/2001 and hopes to carry on in this niche of the market despite very active Asian competition.

Finland

The two Finnish shipyards Aker Finnyards and Kvaerner Masa saw their mother companies merge in February 2002. Specialised in building ro-ros and cruise ships, these yards, after no orders in 2001, signed several contracts at the end of 2002.

Masa Yard won the order for a giant luxurious ferry of 75,000 gt for the Norwegian group Color Line. Aker Finnyards got the order for a cruise ship of 33,000 gt for Birka Line and a ferry sister to the ‘Romantika’ for Estonian account, 40,000 gt, both for delivery in 2004.

The American shipbuilding industry has maintained its position as number 8 in the world, with more than a million gt at the end of 2002. Who could have made such a prediction only several years ago ?

However as no contract for large size ships was concluded in 2002, and the American orderbook also reflects the time it takes to build two series of tankers of 140,000 and 185,000 dwt, which were ordered back in the period 1998-2001. The rest of American production is concentrated on small offshore units, which are built at a multitude of sites in great numbers.