The lockdowns have devastated shipyards, and increased activity were observed outside of the country
The current situation in China resulted in shipowners preferring secondhand vessels. Allied Shipbroking in their latest findings revealed Shanghai’s lockdown resulted in vessel maintenance works flowing outside of the republic.
More activity outside of China
It is understandable that China’s zero-COVID policy caused a hard stop in operations; everything from construction to procuring materials for yards, and manpower shortage. Delays in deliveries are expected as the country races to extinguish the outbreaks. Industry observers noted Shanghai’s lockdowns and port congestions combined with the energy dispute between Russia and Europe, have created an unclear landscape for large investment decisions moving forward. The unstable global economy could encourage a wait-and-see move in the market.
Another broker, Intermodal reported yards in Europe, Mediterranean and Black Sea are fully-booked into Q3 2022, while those in the Middle East and across Asia are taking in more business as China continues to contain the outbreak. Shipowners are reportedly avoiding the republic for essential upgrades, repairs and dry dockings, leading to other yards around the world getting substantial backlogs.
Allied Shipbroking also observed an interest in smaller vessels. It saw prices reach levels of close to 11 per cent growth for some size and age groups, implying the current bullish sentiment dominating the market. On the tankers side, the rebound that occurred recently rekindled buying appetite. Most transactions mainly focused in around Aframax and MR units which also showed the biggest improvement in earnings.
The question now is how well this renewed buying appetite will sustain moving forward, especially as the market continues to heat up and put further upward pressure on asset prices. Despite newbuildings being the cornerstone of shipping, the preference towards secondhand vessels will remain as long as shipowners are not inclined to wait for operations to resume in Chinese yards.
