Japanese yard orders fall to six-year low as container freight slumps
The weakening container freight market has affected the fortunes of Japanese shipbuilders, which saw orders fall to a six-year low in October.
Figures released by Japan Ship Exporters Association show that in October, newbuilding orders plunged by 80% from September to 217,740 gt.
Newbuilding orders have not reached such low levels since January 2017, when 168,100 gt was recorded.
Poor weather and Covid-19 restrictions at Asian terminals compounded the effects of vessel queues in Los Angeles and Long Beach on the US West Coast. This shortened vessel availability, contributing to record high freight rates and vessel earnings. Demand was also heightened as movement restrictions saw more consumers making purchases online. Ship owners were thus, lured into building new ships to boost capacity. In 2021, a record 561 container ships were ordered, a fourfold increase from 114 such orders in 2020.
In October, Japanese shipyards received 10 ship orders, down from 15 ships in October 2021. These included three cargo ships (no distinction between container ships and dry bulk vessels), a sharp drop from the nine ships ordered in the same month last year.
Cumulatively, in the first 10 months of 2022, Japanese shipbuilders won 224 vessel orders, down from 263 ship orders in the same period last year.
Besides the correction in the freight market, rising raw material costs have discouraged
owners from placing orders.