The shipbuilding industry looks set for a rash of insolvencies as one of the sharpest-ever collapses in order levels combines with banks' reluctance to finance ship construction to starve many yards of cash.
Only 28.8m deadweight tonnes (dwt) of ships were ordered between January and November in 2009, according to London-based Clarkson shipbrokers, against 272m dwt for the whole of 2007, the peak of the shipping boom. The dearth of orders means yards are barely receiving any of the downpayments on new orders that previously smoothed out their cash flow. Half the orders placed this year have been in China, the world's number two shipbuilder, whose state companies are the only shipowners worldwide ordering vessels in any numbers.
The past year has already seen three shipyards in Korea, the world leader, several small yards in China, a yard in Japan, three German yards and a Norwegian and US yard file for insolvency. Denmark's only yard is to be closed.