Japanese shipbuilders were often able to offer better delivery dates during the first half of 2001, stealing a march over their Korean rivals who in 2000 got fully booked up until the beginning of 2004.

They are taking advantage also of the yen's depreciation against the dollar by some 15 %. Whereas in 2000 the yen fluctuated in a range between 105 and 110 yen/$, it broke the 120 yen/$ barrier at the start of the first quarter, to then fluctuate between 120 and 125 yen/$ before finishing the year above 130 yen/$. Its exchange rate has become especially attractive compared to the Korean won and the Chinese yuan which remain closely linked to the dollar.

Japanese shipyards which have traditionally favoured the construction of bulk carriers, where they hold some 60 % share of the market, have managed to regain a part of the market from their Korean competitors in the construction of tankers and even containerships.

The market share for tankers has gone up to 27 % end 2001 after having fallen successively from 38 % end 1998, to 29 % end 1999 and 18 % in 2000

 

For containerships this share has gone up to 15 % end 2001, having regressed from 22 % end 1998, to 10 % end 1999, and to 11 % end 2000

 

Japanese shipbuilders know that they need to continue making efforts to be more competitive. Their main concern is to prevent a new deterioration in newbuilding prices. The continuous progress in building capacity, especially from China, coupled with probable and long-lasting decline in demand as from 2002, present serious threats.

The President of the Japanese Shipbuilding Association, Toshimichi Okano, has warned against a competitive drive based on increased volumes.

In order to ensure a better balance between supply and demand, Japan is proposing to adjust its production by carrying out a regrouping of newbuilding sites.

NKK and Hitachi have thus announced at the end of the year their decision to merge their shipbuilding operations. By deciding to close one of the six docks of this new grouping, which has taken the name of Universal Shipbuilding, they have started proceedings towards restructuring and shown the way forward in achieving a better readjustment of supply and demand. At a time when it is also important to be big enough to benefit from economies of scale, Universal Shipbuilding becomes after Mitsubishi Heavy Industries, the second largest shipyard in Japan with Imabari.

Namura has taken control over Hakodate Dock Shipbuilding.

Sumitomo Heavy Industries and Kawasaki Heavy Industries are studying the possibility of spinning off in the near future their shipbuilding activities from their respective groups. This restructuring could take place in 2002. The regroupings between Kawasaki, Mitsui and IHI are still under discussion but do not seem to be advancing. Kawasaki and IHI who signed a co-operation agreement in 1999 have renounced going further for the moment. It is nonetheless likely that the two companies will spin-off their shipbuilding activities.

North Defiance  16,850 dwt, btl 2001 by Fukuoka Shipbuilding, owned by Tachibanaya and long term chartered to Arrow Tanker USA

The small and medium shipyards could be looking for their part to find a form of co-operation between themselves or association with some of the bigger shipyards.

This move towards de-consolidating and downsizing also has its exceptions. Thus Iwagi Zosen seems to want to leave shiprepairing, and to concentrate on newbuilding aiming to producing five to six Handymax per year.

In order to face a doubtless difficult 2002, Japanese builders can also bet on a further depreciation of the yen against the dollar, whilst Japan goes through its recession. Nonetheless, on December 27th 2001, the Chinese daily newspaper - the People's Daily - sounded a warning shot in writing: "If the yen continues its depreciation trend, this will force other Asian countries to devalue. Given today's slowdown in world growth, this could have consequences worse than the 1997-1998 Asian crisis."
 

Fouesnant  6,902 dwt, blt 2001 by Shin Yong, owned by Socatra