Shipyard delivery lead times extend towards the end of the decade

Shipyards and owners are increasingly willing to wait a long time for newbuilds. 

New data from Danish Ship Finance shows that 20% of all ships on order today will deliver only after more than three years from now. At the beginning of 2021, only around 5% of the global orderbook had been due for delivery beyond the following three years.

Delivery times for newbuild contracts signed today have seen one year added, on average, relative to four years ago, according to analysis from Danish Ship Finance.

Chinese yards account for three out of every four deliveries due beyond 2027 and have already secured preliminary utilisation rates of 50% in 2028 and 20% in 2029 with some LNG contracts now stretching into the next decade. 

Danish Ship Finance is forecasting that newbuilding prices will decline in the near term, but the number of shipyards securing new orders may fall as the appetite for new vessels wanes along with what it sees as softening freight rates. 

Latest data from Clarksons Research shows that after three bumper years of orders, the appetite for newbuilds among owners is weak, down 57% year-on-year.

Currently, there are about 348 operational shipyards worldwide, having either secured new contracts or completed deliveries in the past year, according to March data from broker BRS. This is roughly 50% of 2007’s peak of around 700 active yards. 

BRS has argued that the shipbuilding industry entered a supercycle in 2021, equivalent to the 2003 to 2008 boom. 

BRS is predicting 100m dwt of ships will be ordered this year, down from last year’s 193m figure.

“We expect that current worldwide uncertainties will prevail, with a renewed pressure on freight markets delaying investment decisions. The new wave of shipbuilding expansion will have a downward impact on newbuilding prices, which should weaken during 2025 by more than 10% depending on type and size of ships, despite the resistance that will remain given the considerable orderbooks,” BRS predicted in its annual review published towards the end of March.