Global shipyard order books show a forward workload that is diminishing rapidly and will, "tail off to very low levels for 2014 and beyond", according to this year's World Shipbuilding Annual Review and Forecast report, published last week by Drewry Maritime Research.
Shipbuilding production levels have remained at record high levels, exceeding 50 million tonnes over 2010 and 2011, and this year is forecast to remain close to 2011 levels. After that, order books start contracting, the London-based specialist research and advisory organisation for the maritime sector reports.
News from the industry shows shipbuilders are already losing work, with three shipping lines cancelling orders for new ships over the past week alone.
"Over-tonnaging and large operating inefficiencies are hindering a recovery," the Drewry report found. "With order books dominated by bulk carriers and containerships, two of the worst hit markets in terms of oversupply, wreaking havoc with freight rates, it reflects the fact that for some time now ordering activity by shipowners has exceed the requirements of trade growth."
The report, which analyses ship ordering over a 15-year period, concludes, "the immediate prospects for the shipbuilding industry are bleak". It shows that in virtually all fleet sectors the size of the order book at the start of this year will likely more than exceed the requirement for new ships up to 2016, according to Drewry's dry bulk analyst Sanya Shahi.
More than 100 million tonnes of capacity will be delivered in 2012, or about 1,200 ships of all sizes. Nevertheless, shipowners are still placing orders this year even though, "it's very hard to get finance. Some owners are trying to get private players in to provide the funding but it's not working", he added.
Even though shipyards had tried to play "a very intelligent game" by offering fuel efficient and otherwise economically designed ships at discount, "that's not working either. There are not many orders beyond 2014", said Mr Shahi.
"Access to funding - either through retained reserves or debt is very limited for shipowners and in the circumstances it seems almost inevitable that new ordering levels will remain low for some time to come," said the report.
"The difference between forecast demand and capacity is too great to be bridged by contraction from isolated capacity closure, meaning shipyards will have to fight for survival by securing enough of the limited new ordering that is likely to take place in the next couple of years."