Corona and the drop in oil prices – record number of ships in layup

More than 200 vessels in layup at the turn of the year and a large drop in revenue for offshore and passenger shipowners. This is the story told in the Norwegian Shipowners' Association's Outlook Report for 2021. "That 2020 was a demanding year for shipping is clearly shown by the layup figures. A thoroughly globalized industry like shipping faced great challenges when the world literally shut down," says Norwegian Shipowners' Association CEO Harald Solberg.

The Norwegian Shipowners' Association member survey shows that all segments have experienced falling revenues and tight access to capital. But the corona situation has hit the passenger ferry and offshore service and rig segments the hardest. For the transport segments, the most important task has been keeping the wheels in motion.

"Here the greatest challenge has been related to crew changes, but cargo volumes have still been quite high. Thanks to the efforts of seafarers and shipowners, we have received the goods, medicines, infection control equipment and everything else that we, society and businesses, are completely dependent on to keep the wheels in motion,” says Solberg.

As of January 2021, there were 204 ships and rigs in layup. This exceeds the highest layup figures during the offshore crisis in 2016 - 2017. New for this year are ships in layup in the deep sea and short sea segments. This shows that the downturn in 2020 has impacted all segments.

Yet all segments expect a significant reduction in layup figures in 2021. Overall, shipping companies expect layup figures to be cut nearly in half.

Falling turnover and lower profitability

All segments experienced reduced turnover in 2020. But even here, the picture is divided. Where the passenger segment fell by about 46 percent, the transport segment increased its turnover by eight percent.

Deep sea shipowners have experienced a reduction of about six percent. Both offshore segments - offshore service and rig companies - have experienced a reduction in turnover of five percent in 2020.

There is a large gap in shipping companies' expectations for profitability in 2021. Overall, about one in three companies state that they expect weaker profitability in 2021 compared with 2020.

Access to capital

In 2021, only two out of ten shipping companies experience access to capital as good, and as many as six out of ten shipping companies view access to capital as tight. Only one percent of members experience very good access to capital. Access to capital is now about as demanding as it was during the most challenging period of the offshore crisis.

Strong faith in climate solutions

Norwegian shipping companies are taking the lead in the fight against climate challenges. The Outlook survey shows that close to 90 percent believe it is possible to achieve a climate-neutral fleet by 2050, in line with the Norwegian Shipowners' Association's climate strategy.

“With the industry's combined knowledge and innovative power, we can create solutions that the world needs, while at the same time creating value and jobs along the entire Norwegian coast. This requires that we pursue an active policy to ensure that the entire cluster can survive extremely challenging markets in the segments hardest hit by the corona crisis,” Solberg concludes.

In this year's survey, 42 percent of shipowners state that they plan to order new ships or rigs over the next five years, estimating that they will order a total of 135 ships during this period. Asked whether they plan to recycle ships or rigs in 2021, 20 percent of shipowners confirmed plans to do so.