Boom in German Shipbuilding Defies Global Industry Slump

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The German shipbuilding industry has been defying the decline in shipbuilding by increasing number of orders.

High demand for vessels:

An analysis conducted by the German Shipbuilding and Ocean Industries Association (VSM) in Hamburg cited that large shipbuilders in Europe and Germany in particular were experiencing a backlog in orders due to high demand.

The orders from Europe have been increasing considerably and has reached 48 billion euros (57 billion U.S. dollars) in June 2017, a third of which was attributed for by the German shipyards. More than 40 percent of all global shipbuilding orders are currently placed in Europe.

While demand for new freight vessels has plummeted, German and European shipbuilders are hereby benefiting from their close links to the resilient tourism sector by specialising in the construction of cruise ships.

Cruise ships in huge demand:

The cruise ship continues to attract customers with novel attractions and good passenger service. It was projected that twenty six new cruise ships are due to be delivered in 2017.

Moreover, German shipbuilders are well renowned for their state of the art defence sector. Last week, the Bremen-based Luerssen ship builder was able to secure an order worth 2.6 billion euros from the Australian navy for twelve military patrol boats.

According to reports, nearly two thirds of all wharfs across the world have closed since 2009. Only 358 shipbuilding companies remain, of which 30 percent are working on their last vessel. The report also warns, “It is to be expected that several of these wharfs will have to close down as well in the coming months”.

Wharfs are suffering from an oversupply of vessels which has seen freight and charter rates plummet along with the prices for used ships. Furthermore, shipping companies are going through a phase of industrial consolidation of their own which further stifles demand.

China posses a strict competition:

The relative strength of German shipbuilding has also attracted attention from competitors. China has announced its desire to achieve a market share of 40 percent for high-tech shipbuilding and recently formed a joint venture with the major Italian wharf Fincantieri to build cruise ships.

This development has caused anxiety in German ports that domestic shipbuilders could soon lose their advantage over commercial rivals.

As a consequence, German policymakers would have to take steps to improve the prospects of the country’s maritime industry. The VSM voiced concern, however, that such reforms could be hampered by the lack of a stable government in Berlin.

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Source: Xinhua

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