National Association of Italian Shipbuilders Met in Rome Last Week

Assonave – the National Association of Italian Shipbuilders, Shiprepairers and Ship suppliers- met under the chairmanship of Corrado Antonini in Rome last week. The report presented to the meeting showed that the situation is still critical: at 32 million compensated gross tonnes (cgt), world orders dropped by 18% over 2010 and in the first quarter of 2012 orders totalled less than 5 million cgt, down 24% on the same period in 2011.

Were this trend to continue, 2012 would become one of the years when demand hit a record low.

The financial crisis, which has led to a considerable slowdown in seaborne trades, came on top of a very high volume of newbuilding deliveries between 2009 and 2011, which in turn led to a general drop in freight rates, impacting on the profitability of shipowners and hence on ships new orders. The slowdown in orders has not only been recorded in the standard ships sector but also in the market for high tech ships, including cruise vessels, with the sole exception of the offshore sector and gas tankers, where the Korean and Norwegian shipbuilders excel.

Italian shipbuilding – mainly positioned in specialised niche markets – reflects the general trend of the industry: the orders gained last year amount to approximately 330,000 cgt, , much less than the pre-crisis yearly average of 1 million cgt. As a consequence, the orderbook fell from 2.8 million cgt to 885,000 cgt at the close of 2011.

Considering that in the medium term world demand is not expected to exceed 40 million cgt and that these volumes will be matched by a production capacity which has reached 60 million cgt, the extent of the serious overcapacity which the sector will have to bear in the years to come is clear.

Within this context, in 2011 the cruise sector counted 19.5 million passengers worldwide, compared to 18.8 million in 2010, an increase of 3.7%. The outlook for the future is good. However, the fact that 10 ships were ordered in 2011, against 7 the previous year, should not lead to over-optimistic reactions: indeed in terms of lower berths the ships ordered amount to approximately 23,000 LBs compared to over 24,100 LBs in 2010.

Furthermore, if the orders were compared for the four pre-crisis years, 2004-2007, to 2008-2011, the dramatic trend can be seen with the numbers of ships halved: 51 against 21.

Further cause for concern is the double order from Aida Cruises gained by Mitsubishi H.I. following financing by Japan Bank for International Cooperation.

In the naval sector, alongside positive results in the international field, concern is raised by the continuity of demand from the Italian Navy whose budget, which has been reduced considerably over the years, has been further cut by the recent measures aimed at containing public spending.

The European Commission has sought to tackle this critical downturn in a number of ways and through CESA – the European Association of Shipbuilders and Shiprepairers – it has been possible to obtain more favourable credit policies from the EIB and the renewal, for 2012-2013, of the Shipbuilding Framework which regulates the innovation aid to European shipbuilders. At the same time a new initiative, LeaderSHIP 2020, has been started with the aim to draw up a new industrial policy focusing on the development of sustainable maritime transport and on the exploitation of renewable marine energies, using the three levers of finance, research and innovation and social policies.

Speaking after the meeting the Chairman, Corrado Antonini, said: “We are faced with a further period of difficulty but we can and will use the wide range of levers at our disposal on an industrial, strategic and research level. It is up to the workforce to redouble their efforts to improve productivity and up to the state to ensure we are supported in terms of regulations and funding, especially for export and technological innovation. We must work together if we want to stay alive and to be ready to reap the rewards of a recovery in the sector, which we all hope will come sooner than we might now think.”

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Shipbuilding Tribune Staff, July 24, 2012; Image: fincantieri