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Sunday, April 23, 2017

Global Fleet Growth: A More Mature Trend?

July 24, 2016

Graph: Clarksons Research

Graph: Clarksons Research

 The supply of ships into the fleet is a key determinant of vessel earnings across the shipping sectors, and world fleet growth is closely followed by everyone in the maritime industry, says Clarksons Research.

In recent years the overall pace of growth of the world fleet appears to have slowed and stabilised. However, the pattern of fleet expansion across the key shipping segments shows a wider range of growth trends.
Following a rapid expansion in the size of the fleet, the pace of world fleet growth has slowed in recent years. At the start of July 2016, the global fleet totalled 91,773 ships of a combined 1,237m GT. 
Historically high levels of newbuilding investment and subsequent record shipyard deliveries saw the fleet increase 64% between the start of 2005 and 2012 to total 1,035m GT. Annual fleet growth has since slowed, falling to around 3.7% in 2014 and 2015, limited by firmer demolition activity and generally lower deliveries. 
In the year to date, the world fleet has grown by 1.5% in tonnage terms and is projected to expand by 2.7% in full year 2016. This would be the slowest rate of annual fleet growth in over a decade.
Several key ship sectors have generally experienced slowing rates of fleet growth in recent years. The bulker fleet currently accounts for 35% of the fleet (432.6m GT) and has grown by a mere 0.7% in 1H 2016. Historically weak earnings supported record levels of bulker demolition in Q1 2016 and this has limited the impact of deliveries on the size of the fleet. 
This compares to a CAGR of 8.2% between start 2005 and 2016 in the bulker fleet with peak growth of 16.9% p.a. in 2010. Elsewhere, the expansion of the global boxship fleet has slowed considerably, averaging 4.7% p.a. between 2011 and 2015 compared to 10.7% p.a. between 2005 and 2010. 
Weaker demand has led to sporadic ordering with upsizing counterbalanced by firm demolition in certain sectors, and the boxship fleet has grown by just 1.0% in 1H 2016, in GT terms.
However, there are several ship sectors where fleet growth is picking up pace. The oil tanker fleet has grown by 2.6% in the year to date to 283.3m GT at the start of July, equivalent to 23% of the global fleet. 
This compares to fleet growth of 3.0% in full year 2015, and just 1.4% in 2014, with a firm market having supported delivery volumes and limited demolition. Elsewhere, fleet growth in the gas sector rose to 8.8% in 2015 and the fleet has expanded 4.6% in 1H 2016. 
The LPG carrier fleet has increased by 9.6% in 2016 so far after a firm earnings environment encouraged newbuild investment in recent years. This compares to a 5.4% CAGR in the 2005-15 period. LNG carrier fleet growth has been more moderate in 1H 2016 at 2.7%, with weaker demand not only delaying investment decisions but also slowing deliveries.
For a shipping industry struggling with oversupply and lower demand growth, slower fleet growth could provide a note of positivity. 
Although firm expansion in the tanker and gas carrier fleets may put pressure on these sectors, weaker fleet growth in the bulker and boxship sectors could help start to rebalance these markets. For the latest fleet growth trends, keep on reading World Fleet Monitor.
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