German shipyards see spectacular order reversal

	German mid-size container ships. All the rage, but why?

Germany’s Aker Ostsee has just announced a spectacular new order for eight 2,500 TEU container ships worth USD 330 million from Cyprus-based, German-backed owner Reederei Schoeller Holdings.
    The contract brought to 28 the number of new ships on order at Aker Ostsee alone. More to the point, 21 of them have been ordered since the start of 2003 – a complete reversal of the situation in 2001 and much of 2002.
    Not only Aker Ostsee – which groups Aker MTW in Wismar and Aker Warnow Werft (the old Kvaerner Warnow Werft) in Warnemünde – has benefitted. Yards from Nordseewerke (NSW) in Emden and HDW in Kiel in the West to eastern yards Volkswerft in Stralsund and Peene-Werft in Wolgast have also booked new orders, most of them for container ships of 2,500– 2,700 TEUs.

Things have looked up
In 2001 hardly any new contracts were taken in Germany. In the first half of 2002 just six orders were placed. Things have looked up, most dramatically for Aker Ostsee, since last October when the EU allowed members to give six per cent subsidies on container ships and some tanker types.
    The German Shipbuilding association (VSM) said 51 ships worth EUR 2,100 million were ordered in the first nine months of 2003 and predicted about 50 more worth EUR 1,500 million would be booked by year’s end. The VSM appeared to think that EU subsidies were the main reason for the dramatic order reversal, but Reinhard Stellemanns, Financial Director of NSW in Emden, said the Germans were only getting orders because Asian yards were flooded with work.
    “Asian shipyards in particular are full for years to come with the construction of giant cargo ships of 7,000 and 8,000 TEUs”, he said.
    Stellemanns was commenting after NSW booked orders from German owner Reederei Hartmann for two 2,702 TEU newbuildings for delivery next year and in 2005. Shipowner Alfred Hartmann, who has also ordered 2,500 ships at Aker Ostsee, was quoted as saying he did not exclude the possibility of further orders for NSW.
    NSW was particularly pleased with its order because the unusually sized ships, costing more than EUR 70 million each, will be 13 meters longer versions of the yard’s standard 2,500 TEU ships. They will be 215.45 meters long, 29.8 meters wide and of 37,950 DWT.
    Also bigger than usual are the latest eight Aker Ostsee ships. They are Type Baltic CS 2700s. Thirteen smaller Baltic CS 2500 ships have already been ordered in recent months at Aker Ostsee. The Baltic CS 2700 vessels will be 221.6 meters long, 29.8 meters wide and of 37,800 DWT.
    According to NSW’s Stellemanns, the global shipbuilding market remains tense with prices at rock-bottom but despite that, there are good chances for the Germans to win contracts to build smaller ships.
    Correspondents recalled a similar situation prior to EU subsidy abolition in 2000 when around 30 boxships of around 2,500 TEU vessels were ordered in German yards. Sources also suggested that full Asian yards, along with EU subsidies, had contributed to that order flood.
    Could there be another reason also for the orders this time round – one unthinkable in Germany prior to 2000? Hundreds of jobs are going in German shipyards and others are on the line. Volkswerft, Aker Ostsee, even HDW and Meyer are cutting jobs.
    In most of the yards, workforces have volunteered to forego holiday and other benefits in return for guaranteed work. HDW said it could not build new 212 meters long, 2,500 TEU container ships for German owner MPC “at Korean prices” if workers did not accept cuts in pay and benefits. They agreed and HDW got the orders.

//Tom Todd