Shipbuilding orders tumble by 32.6 percent in first quarter

The amount of shipbuilding orders received plummeted in the first three months of this year.

According to the Korea Shipbuilders Association and relevant companies on June 12, orders received in the first quarter amounted to 55 vessels or 1.7 million CGT (Compensated Gross Tonnage), falling by 32.6 percent from 74 vessels or 2.518 million CGT in the same period of last year.

However, the actual vessel deliveries increased by 24.1 percent to 54 vessels, 1.852 million CGT, from 47 vessels, 1.492 million CGT, a year earlier.

Order backlogs increased by 21.1 percent to 504 vessels or 16.27 million CGT. This is however a small decrease from the number of backordered vessels last year. The current level of backorders still leaves two and half years of work.

Concerning the relative lack of orders, "It is not true that this year is a slump in orders. Rather, last year was a record year", an association member said.

Other factors also played a part. Specifically, the shipbuilding industry is regulating order levels and focusing more on profitability and value added products.

Meanwhile, the Japanese shipbuilding industry bounced back with a 46.6 percent increase over the same period last year, receiving 90 vessels or 3.86 million GT (Gross Tonnage) in the first quarter of this year. Although they received only 86,000 GT in January, they received 1.96 million GT March, a sharp leap.

"Since last year, CGT has commonly been used in Korea for calculating received order results. It is calculated by multiplying GT a conversion factor. That conversion factor is determined by the ship’s purchase price, the cost and time needed to build the ship, and the potential sales volume for the ship. This means we are not behind Japan, only that we did poorly in the first quarter", an industry expert said.