Norwegian shipowners are less optimistic in 2015 amid falling oil prices, heightened geopolitical tensions, and sluggish, uncertain growth in the global economy, a new survey from the Norwegian Shipowners’ Association shows.
The survey, the Norwegian Shipowners’ Association Outlook report for 2015, shows that Norwegian shipowners are less optimistic than last year when it comes to both turnover and profitability.
“We have seen a marked negative shift in just a short time. 2015 will be a challenging year for Norwegian maritime companies, but we must be prepared for 2016 to be even more challenging,” states Sturla Henriksen, CEO of the Norwegian Shipowners’ Association (NSA).
Shipowners are anticipating growth in turnover of only 2.3 percent in 2015, up to NOK 268 billion, compared to 6 percent anticipated growth last year. All segments except offshore service expect to see some growth in turnover in 2015, according to the NSA survey.
In the offshore service segment, shipowners expect a drop in turnover of 4.2 percent in 2015. “This would mark the first drop in turnover since 2002 for this segment,” says Henriksen. “Growth in turnover for offshore service shipowners was 9.9 percent in 2014, so the negative development is significant.”
The picture for traditional shipping is not as bleak. Deep sea shipowners foresee an increase in turnover of 5.1 percent in 2015, compared to actual growth of 3.2 percent in 2014. Short sea shipowners have seen moderate but stable annual growth, and anticipate turnover to rise by 2.5 percent in 2015. Actual growth for this segment was more than 5.5 percent in 2014.
Rig owners meanwhile expect growth in turnover of 9.1 percent in 2015, an ambitious figure considering that investment on the Norwegian Continental Shelf is expected to fall by approximately 10 percent in 2015, according to the NSA. For 2014, offshore contractors experienced growth of 2.2 percent.
Shipowners are also less optimistic regarding their profitability in 2015 than they were in 2014. In all 35 percent of shipowners expect improved operating results on the year, compared to 72 percent in 2014. 42 percent of shipowners anticipate weakened operating results in 2015, a dramatic increase from only 8 percent last year.
Shipowners are more pessimistic regarding access to capital. In 2014, around half of shipowners reported that access to capital was good or very good, while today only one out of four report the same, the NSA survey shows.
Ships and rigs in storage
Heading into 2015, Norwegian Shipowners’ Association members had 26 vessels in storage, including 20 ships and six mobile offshore units. “Our members expect the number of vessels in storage to rise, to 42 by the end of 2015 – 29 ships and 13 rigs,” Henriksen reports.
This trend will also affect the labour market and access to relevant competence. The Outlook survey reveals that one of four Norwegian shipowners plan to reduce the number of Norwegian seafarers on their vessels in 2015.
Henriksen emphasises the shared responsibility of the industry and the government in seeking solutions, and calls for productive dialogue in the times ahead.
“The industry itself is doing all it can to survive in these challenging times, and we are encouraged by the signals sent out by the government before Easter indicating changes in the rules governing paid leave. We also have high expectations for the new maritime strategy, which the government has said will be released during the spring. We consider four items to be of particular interest in the strategy: a competitive shipowning tax; strengthening the Norwegian flag by relaxing Norwegian cabotage rules; a strong net wage scheme to encourage employment of more Norwegian seafarers; and improved terms of private ownership. One thing we know: Proactive policies yield good results, even in challenging times,” Henriksen concludes.
Facts from about Norwegian shipping in 2015:
- The world’s 6th largest shipping fleet measured in market value. The Norwegian fleet is growing in value, and has trebled over the past decade. The Norwegian fleet now represents nearly 6 percent of the global fleet, measured by value.
- The world’s most modern and next-largest offshore fleet.
- The Norwegian foreign-going fleet has grown by more than 150 ships in the past decade. The percentage of Norwegian-flagged ships has gone down, however, to 42 percent, compared to 60 percent ten years ago.
- The average age of ships in the Norwegian fleet has gone down by nearly three years since 2007, and is now 11 years. Fleet renewal has been comprehensive.
- The offshore service fleet has grown over the past decade by 354 ships, to 637 ships today, a growth of 80 percent.
- The Norwegian Continental Shelf is the biggest single market for Norwegian-controlled rigs, with 40 percent operating there. Investment levels show a declining trend, and rig companies are facing challenging times. The Norwegian-controlled rig fleet has been reduced, and now numbers 50 units.
- The Norwegian fleet features leading players with a strong global market position in advanced, industrialised segments demanding high quality and technical, operational and commercial competence: chemical and gas tankers, auto carriers, refrigerator ships, specialised bulk ships, offshore vessels and rigs.
- The maritime cluster has also been strengthened in recent years, as witnessed by the success of Norwegian shipyards, DNV GL, DNB, Nordea, the drilling cluster NODE in the south, Kongsberg Maritime, and Jotun.
- The maritime cluster makes up one of Norway’s largest and most important industries
- Norway’s most important export industry after oil and gas
- Creating value for NOK 175 billion annually (100 billion in wages), 110 000 employees, and with 30-50 percent of all business in many coastal communities
- For the first time, shipowners have surpassed NOK 100 billion in annual value creation
- The industry’s contribution to state and local tax income is significant. Tax income from the maritime industry is 80% higher per employee than in other private Norwegian industry