Marine Money Japan Ship Finance Forum Current Situation in Shipbuilding -World and Japan- Masashi Terakado The Shipbuilders Association of Japan May 12th, 2016
Contents 1. Current Situation and Projection on Seaborne Trade 2. World Shipbuilding Industry 3. Advantages of Japanese Shipbuilders 4. Measures on International Regulations 1
1-1. Seaborne Transportation Japan s Lifeline Share of Trade in Japan Air Transportation 0.4% Seaborne Transportation 99.6% 99.6% of trade in Japan is carried by ships. Japanese shipbuilders have continued to build the ships, which are essential for the seaborne trade. Source: Japan Ship Exporters Association 2
1-2. World Seaborne Trade (Bill.Ton) 12 10 8 Iron Ore Coal Grain Container Crude Oil Oil Products Other Cargo 1986 2015 86/15 Iron Ore 0.3 1.4 5.2% Coal 0.3 1.2 5.2% Grain 0.2 0.4 3.0% Container 0.2 1.7 8.4% Crude Oil 1.0 1.9 2.1% Oil Products 0.4 1.0 3.5% Other Cargo 1.4 3.2 3.0% Total 3.7 10.8 3.7% Other Cargo Oil Products 6 Crude Oil 4 Container Grain 2 Coal 0 86 90 95 00 05 10 15 Iron Ore Source: Clarkson 3
Contents 1. Current Situation and Projection on Seaborne Trade 2. World Shipbuilding Industry 3. Advantages of Japanese Shipbuilders 4. Measures on International Regulations 4
2-1. History of World Shipbuilding Industry (Mill.GT) World Completions (1965-2015) 120 100 Japan: Largest Market Share 1967-1999 Bankruptcy of Lehman Brothers (2008) Rise in China 2005-2011 101.8 mil. gt suffering situation again 80 60 40 Oil Crisis (1973&1979) 1975 34.2 mil. gt Rise in Korea 1995-20 suffering situation 0 65 70 75 80 85 90 95 00 05 10 15 Completion Data: IHS Japan Korea Europe China Others 5
2-2. Oversupply of Fleet Index (1990=100) Index Comparison between Seaborne Trade and Fleet 300 GAP 250 200 150 100 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: Clarkson Seaborne Trade Fleet 6
2-3. Problems in Shipbuilding Industry - Overcapacity and Oversupply Bad Cycle in Shipbuilding and Shipping Additional capacity Distortion of market Imbalance of supply & demand Additional fleet Imbalance of supply and demand Government intervention Shipbuilding Low newbuilding price level Incentive to buy newbuilding Shipping Low freight price level Unsustainable business Unsustainable business 7
Contents 1. Current Situation and Projection on Seaborne Trade 2. World Shipbuilding Industry 3. Advantages of Japanese Shipbuilders 4. Measures on International Regulations 8
3-1. Completions by Shiptype of Japan, Korea, China (2015) [ 値 ] 1% 6% Japan Korea China 5% 6% 3% 11% 9% 10% 1% 10% BC CONT 6% [ 値 ] 31% 39% 15% 21% 48% Tanker LNGC Offshore Other World Completion share by shiptype 100% 80% 60% 40% 20% 3% 12% 9% 49% 31% 30% 8% 52% 56% 39% 12% 83% 29% 24% 27% 37% 38% 19% 10% 37% 34% Other China Korea Japan Source: IHS 0% 20% 19% 5% 6% 5% 6% BC CONT Tanker LNGC Offshore Other Total 9
3-2. Contracts (Orders) of Export Ship in Japan (Mill.GT) Share of Contracts in 2014 30 26.8 26.6 13% 25 24.7 22.2 16% 20 19.5 19.4 71% 15 14.6 12.3 12.1 14.0 11.2 14.6 14.8 Share of Contracts in 2015 10 5.7 9.0 8.1 21% 5 45% 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Bulker Tanker Others 34% Source: Japan Ship Exporters Association Bulker Tanker Others 10
3-3. Development - Scale of Shipbuilding Industry in Japan Shipbuilding Companies, Facilities, Workforce and Completions (SAJ members only) 1975 1980 1988 2010 2015 Number of Shipbuilding Companies Number of Berths and Docks* Workforce (x1,000 persons) *5,000GT over Newbuilding Completions (mill.gt) 26 26 19 19 17 99 53 38 47 47 161 75 36 53 46 1975 1980 1988 2010 2015 1st Peak 1st Bottom 2nd Bottom 2nd Peak Present 14.4 5.0 3.5 17.5 10.6 Comparing scales between 1975 and 2010, Workforce: Restructured to 1/3, Completions: Increased by 1.2 times Productivity: Improved by more than tripled Source: SAJ 11
3-4. Comparison among Shipbuilding Industries of Japan, Korea, China Facility Capacity (Mill.CGT) Productivity* Workforce (10,000 persons) Japan 6.3 5 Korea 11.7 11 China 19.7 49 *Numbers in 2012 adopted for comparison Productivity (CGT per person) 126 [100] 106 [84] 40 [32] Quality/ Performance Technology Research/ Development Scale of Workforce 12
3-5. Japan s Orderbook Share by Nationality of Shipowner End of December, 2015: Total 43.1 mill.gt 8% 37% 41% 4% 4% 1% 2% 3% JAPAN CHINESE TAIPEI GREECE US SINGAPORE BERMUDA UNCONFIRMED OTHERS Source: IHS 13
3-6. Maritime Cluster of Japan [Advantage of Japan] Shipowners, Shipbuilders, Ship Equipment Suppliers and Shippers are strongly connected. 1) Shipowners & Shipbuilders 70% of Newbuilding order from Japanese Shipowners are placed to Japanese Shipbuilders. 2) Shipbuilders & Ship Equipment Suppliers Japanese Shipbuilders procure 95% of ship equipments from domestic suppliers. 3) Shippers & Shipowners 60-70% of seaborne cargo on import and export trade in Japan is transported by Japanese Shipowners. 14
3-7. Newbuilding Requirement (SAJ2015) (Mill.GT) 120 100 80 Newbuilding Requirement 2014-2035 (Mill. GT, p.a.) Share Total 63.4 100% Others 6.9 11% Gas Carriers 3.9 6% Other Dry Cargo Ships 5.2 8% Containships 17.1 27% Bulk Carriers 18.2 29% Tankers 12.1 19% 69.9 96.2 60 52.4 40 41.8 20-1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Tankers Bulk Carriers Containerships Other Dry Cargo Ships Gas Carriers (LNGCs & LPGCs) Others SAJ2015 Actual Data: Clarkson, Forecast Data: SAJ 15
3-8. Current Situation and Projection in the Shipbuilding Industry Summary The seaborne trade is projected to increase worldwide along with the world population growth. A number of existing aged vessels are expected to be demolished steadily. The two factors above will create newbuilding demand. The point is Who s the one to build the vessels? Advantages of Japanese Shipbuilders 1) Productivity 2) Technology 3) Maritime Cluster 16
Contents 1. Current Situation and Projection on Seaborne Trade 2. World Shipbuilding Industry 3. Advantages of Japanese Shipbuilders 4. Measures on International Regulations 17
4-1. IMO Regulations and Newbuilding Contracts Contracts of Export Ship (2011-2015) (Mill.GT) 5.0 Tier III NOx regulation for vessels started to build on or after January 1st, 2016 4.0 3.0 Others Cargo Ship Tanker Bulk Carrier Average New Noise Code for vessels contracted on or after July 1st, 2014 New Common Structural Rules for vessels contracted on or after July 1st, 2015 2.0 1.0 0.0 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 2011 2012 2013 2014 2015 Source: Japan Ship Exporters Association (fiscal year) 18
4-2. New Measures on International Regulations From ASEF s website 19
4-3. New Measures on International Regulations From ASEF s website 20
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