Orders for new ships sink by 90 percent.

The global shipbuilding industry has been hit hard by the economic downturn. New orders have declined by more 90 percent and cancellations are increasing, according to the OECD. "The outlook is unlikely to improve for some time," says the OECD. While shipbuilding was initially insulated from the effects of the financial crisis due to strong order books, over the last six months orders have plummeted. Now there is a "need for concerted action to address the growing problem of overcapacity in the shipbuilding industry," says the OECD.

New orders fell from 22 million compensated gross tons (cgt) in the third quarter of 2007, to 12.3 million cgt in the third quarter of 2008 and to only 1 million cgt in the first quarter of 2009. "Virtually every shipbuilding economy has experienced an almost unprecedented fall in new orders, with some economies having reported no new orders at all in the last 12 months," says the OECD. Governments in Korea, Japan and China are extending loans and credit guarantees to both yards and ship buyers. "Their aim is to minimize bankruptcies among enterprises unable to deal with the combined affects of tightening capacity and liquidity and a collapsing order book," says the OECD.

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