The depth of the last round of ship cycle

2. Overview of "volume and price" of ship market from 2002 to 2008

Now let's focus on what happened to the global shipping market from 2002 to 2008 in the last upward cycle. The indicators we track are still new build prices and new ship orders for each type of vessel segment.

Next, we look at orders for new ships. The trend of this index also has several stages like the price of new shipbuilding: 1. From 2002 to 2003, the number of new ship orders rose rapidly, and oil tankers and container ships were the main driving force of growth; 2. From 2003 to 2005, the number of new ship orders declined, and the main ship types that declined were oil tankers, container ships and bulk carriers. 3. From 2005 to 2007, the number of new ship orders rose rapidly, and the main thrust in 2006 and 2007 were oil tankers and bulk carriers respectively. By 2007, global orders for new ships in terms of deadweight tonnage exceeded 20 billion DWT, a 160% increase from 2005.

To sum up, the volume and price of the last round of ship cycle is the general trend, but the process is not smooth sailing, but there are twists and turns. In addition, the performance of different ship types varies greatly over different time periods. This makes us question: As a very classic ship upward cycle, why are the economic performance of various types of subdivided ships different in different time periods? What are the common reasons that make each type of ship have their own boom period from 2002 to 2008? In the next chapter, we will focus on the analysis of the "personality reasons of subdivided ship types" and "market commonality reasons" that contributed to the continuous upward trend of ship market popularity from 2002 to 2008.

Second, get to the bottom of the matter: analysis of the reasons for contributing to the last big cycle

1. The personality reasons of each subdivision ship type

Major ship types include oil tankers, bulk carriers and container ships. Different from the upswing cycle that mostly relied on the support of oil tankers from 1956 to 1973, the ship upswing period from 2002 to 2008 can be described as "a hundred flowers blooming", and all types of mainstream ship types have ushered in volume and price growth, but the growth pace is different. We reviewed the tanker, container and bulk carrier markets in turn and explored their respective growth logic.

1) Tankers: Double hull tankers replace single hull tankers, contributing to the growth of thrust in the early stage

It can be seen from the distribution of new orders signed by each subdivision ship type that the main driving force of the ship market in 2002~2003 was from oil tankers. The early growth demand for oil tankers did not come from the new demand: 1) First of all, although the global oil price began to accelerate after the 21st century, the overall increase was still not obvious from 2000 to 2003, and the demand for downstream shipping enterprises to expand capacity was not sufficient; 2) We compared the age distribution of each vessel type in 2003 and 2004, and found that the proportion of older tankers older than 20 years in the fleet decreased rapidly, which indicates that a large proportion of older tankers were withdrawn from the market in 2003, so the large number of orders generated in the year met the replacement demand in nature.

In fact, there was a general expectation in the shipping market that a large number of single-hull tankers built in the 1970s would be withdrawn from the shipping market by 2010, and the proportion of elimination accounted for a high proportion of the fleet at that time. The reason why these old single-hull tankers have to be withdrawn from the market is due to the new shipping regulations of IACS and IMO. One of the biggest impacts on tankers is the Common Structural Practice (CSR), which comes from the International Maritime Organization's concern about the environmental pollution risk caused by oil spills from single-hull tankers. By the end of 2004, among tankers with more than 5,000 deadweight tonnage, double-hulled tankers accounted for 65% of the total tonnage and 56% of the total number of ships, and the proportion of elimination is still very large.

Global oil prices began to rise rapidly after 2004, and a large number of old tankers were dismantled from 2002 to 2005 (according to ISL, a total of 17.42 million deadweight tons were dismantled in two years, accounting for 71% of all ships dismantled), and CSR will come into effect on April 1, 2006. As a result, a large number of ship owners placed orders first, and these three factors together led to the rise of the tanker market again in 2006, and the new tanker orders signed in the first half of 2006 reached 46.5 million deadweight tons, more than the total number of orders received in 2005. By the end of October 2006, tanker orders accounted for 124% of single-hull tanker ownership, far more than 79% at the beginning of the year. By 2008, it can be seen from the age statistics of various types of oil tankers divided into single and double hulls, except for the VLCC still maintaining a large number of single hulls in the age segment of 10 to 14 years, the double hulling process of the rest of the deadweight tonnage of oil tankers has achieved great progress.