Covid, emissions, finance – orders plunge to 20-year low as no one’s buying new ships
Bloomberg: There’s hardly anyone buying new ships, with orders plunging to a 20-year low due to a potent combination of uncertainty over environmental regulations, the economic fallout from the coronavirus pandemic and a lack of financing.
“The IMO has brought in significant, ambitious and important targets around emissions,” said Clarksons Research’s managing director Stephen Gordon. It remains unclear the exact policies and regulations that might be introduced and what technology will be adopted, he said. Ships are long-term investments, and buyers run the risk that their vessels will become obsolete.
The global shipping industry is in the midst of one of its biggest changes in a generation after stricter environmental rules kicked in at the start of the year. Ship owners face paying more for cleaner fuel, retrofitting ships with pollution-reducing scrubbers or even ordering new vessels. Compounding the uncertainty has been Covid-19, which has upended supply chains and stalled trade flows.
“The virus is a further hit to demand that’s already barely even there,” said Rahul Kapoor, head of commodity analytics & research, maritime & trade at IHS Markit. “With the pandemic’s hit to economic activity and supply chains, ordering new ships is now the lowest priority for companies. They’re concentrating on just trying to maintain profit margins.” The virus has also delayed the completion of shipbuilding projects, he said.