Shipbuilding’s Slippery Slope

In general, it is difficult to engender sympathy for shipowners. To market insiders, the plight might be somewhat easier, but one could make the case that market cyclicality is largely within their collective control. Although demand and trade growth are dictated by forces well beyond the confines of offices and board rooms, the booms and busts of the market are largely vessel supply related. The delayed nature of the shipbuilding process only serves to complicate matters as shipowners must evaluate how favorable they expect market conditions to be when their vessels hit the water. While shipyards take the opposing position, it could be argued that they are even more exposed than the ship orderer; shipyards face the threat that orders will be cancelled if the mood isn’t right. As orderbooks swell on the tide of positive sentiment, observers question, how much is too much? Download here