The Orderbook And The Fleet: A Golden Ratio?
The orderbook to fleet ratio is a useful indicator of future supply growth, both across the industry as a whole and within sectors, according to a research report by Clarksons.
Since peaking in 2008, the orderbook has fallen significantly as a percentage of the total fleet, with the downward trend continuing in 2015 so far. Meanwhile, contrasting fortunes have caused the bulker and tanker orderbooks to move in opposite directions.
One way to look at the orderbook, aside from its absolute level, is as a percentage of the fleet. This ‘orderbook to fleet ratio’ can provide a useful indicator of future supply growth. A proportionally Large orderbook will generally lead to a fast growing fleet, although the volume of tonnage recycled has to be considered.
The impact of delivery lead times is also important: if vessels on order are due to be delivered over a longer period, supply growth will be more gradual.
When looking at the fleet as a whole, the orderbook to fleet ratio currently stands at 16% in dwt terms, having fallen gradually in 2015 so far to reach its lowest level since August 2013. In numerical terms the orderbook makes up 5% of the fleet, showing the extent of recent upsizing.
In dwt terms, the orderbook to fleet ratio peaked at 54% in 2008, in the later part of the ordering boom, before collapsing to 16% in 2013. As expected, the period after this peak was characterised by rapid fleet growth, with the size of the global fleet rising by 27% in three years, from 1,183m dwt to 1,492m dwt.
The bulker orderbook to fleet ratio grew the fastest of any major sector from 2006 to 2008, reaching a peak of 78% before dropping rapidly. Having rebounded to 25% in 2014, the bulker orderbook has fallen to 16% of the fleet in the year to date, with the volume of tonnage on order down 29% to 125m dwt. This is despite modest bulker fleet growth of 2.6% in 2015 so far (compared to 3.3% growth in the total fleet), driven by firm demolition.
In comparison, the tanker orderbook grew much more slowly before 2008, but has been on an upward trend since 2013, when it bottomed out at 11% of the fleet. 338 tankers of 40m dwt have been contracted in 2015 so far, causing the orderbook to fleet ratio in the tanker sector to rise from 15% to 18% in dwt terms, passing above the ratio in the bulker sector, as shown on the graph. Crude ordering has been particularly firm in 2015 so far, with the VLCC orderbook rising from 14% to 19% of the fleet.
Meanwhile, the containership orderbook has been more steady since 2013, fluctuating between 18% and 24% of the fleet. In 2015 so far the orderbook to fleet ratio has remained close to 19% in dwt terms, with firm Post-Panamax boxship contracting matched by deliveries into the fleet.
Although the picture differs between sectors, the orderbook to fleet ratio appears to be on a slow downward trend, limiting the scope of future supply growth. Moreover, with shipbuilding capacity now much lower than in 2008, the orderbook is less likely to grow as rapidly in future as it did during the boom. In extremely challenging times for shipowners, the orderbook to fleet ratio is one indicator that might just be looked upon positively.
