The old jazz tune tells us It Ain't What You Do, It's The Way That You Do It, but in shipbuilding both are important the level of output but also the type of ships being delivered. Last week's analysis took a look at deliveries in terms of contract value, and noted that on this basis global output may have peaked in 2010. This may be the case (though the 2012 total could get close) but the picture changes in different units.
Delivering Deadweight
In 2010, as the graph shows, global shipbuilding delivered a record 151.6m dwt of ship capacity, and in 2011 it actually surpassed this total with 162.4m dwt of output. Since then, a total of 87.4m dwt has been achieved in the first half of this year. Last month we projected that 2012 deliveries would reach just under 158m dwt, but it looks like that will now be subject to upward revision - 2011’s record could yet be broken.
How to Compensate
However, there are other ways to define output. Compensated Gross Tons (CGT) analysis factors in the amount of shipyard ‘effort’ or ‘capacity’ involved in building ships. In terms of CGT, it appeared that global deliveries peaked in 2010 at 52.0m CGT, before dropping to 49.8m CGT in 2011.
In the Mix
The mix of ship types has a clear impact on the level of dwt or CGT output. More straightforward vessels (e.g. bulkcarriers) generate relatively less CGT per dwt than more complex vessels to build (e.g. gas carriers). The graph shows the CGT/dwt ratio each year. It stood at 0.46 in 2008 but has declined sharply and stood at 0.31 in 2011 and 0.29 in 1H 2012.
Bolstered by Bulkers
This trend has resulted from the increasing share of deliveries (in dwt) coming from the bulker sector. In 2008 bulker deliveries accounted for 26.4% of all dwt delivered but by 2011 they constituted 60.5% of the total. This drove the CGT/dwt statistic downwards but the sheer volume of bulker deliveries ensured that the pace of dwt output has continued to rise in 1H 2012.
However, as mentioned above, this may not necessarily have meant more ‘work’ for the shipyards; in CGT terms output slowed in 2011. On the other hand, total dwt delivery volumes are such that, even though the bulker sector dominates, global CGT output in 1H 2012 reached 25.4m CGT and could yet get close to the historical record of 2010.
Worth the Effort
So, deliveries this year in dwt terms could well pass previous records. However, output has been driven by bulker deliveries, and the level of shipyard effort involved, though it might reach a new record, won’t be much different from the two previous years. Shipbuilders can take some heart from the fact that they are still working at around 2010 levels, but how to get even close to that in future is a much more difficult question. For sure, it won’t be just about what they do, but how they do it too.