20 January 2023 (Lloyd's List) - SHIPYARDS in China are expected to attain very high levels of delivery this year even as labour shortages and a sluggish global economic recovery cast a shadow over market prospects, according to a report. Newbuilding completion volumes are predicted to exceed 42m dwt, which would be the highest since 2014, according to the country’s shipbuilding association Cansi. This comes against the backdrop of a recovery in ordering activity in the past two years. While orders won by Chinese builders fell 32.1% year on year to 45.5m dwt in the past year, the orderbook grew over 10% to 105.57m dwt, ensuring an overall workload lasting until late 2025. However, completion was down 4.6% from 2021 to 37.9m dwt in the past year when the draconian lockdowns in the country caused serious disruption to yard operations. The results secure China’s position as the world’s largest shipbuilding nation. It is followed by South Korea and Japan, said Cansi, citing its own data and that from Clarksons. However, challenges remain at home and abroad. The report said the industry faced labour shortages owing to the way the government handled Covid and a growing order backlog of high-tech vessels, such as those equipped with dual-fuel propulsion systems. “There has been a quite big loss of contract workers due to the pandemic impact, while the attendance rate at yards have dropped considerably with the recent infection flare-up, which has intensified the labour shortage issue,” it said. The demand for ship components and equipment are increasing along with the increase of new orders, but the delivery of supplies has been delayed due to lockdown-related disruptions in logistics and production. The arrival of some import equipment, such as communication and navigation systems, face delays of up to three months, while others, such as ship engine chips and crankshafts, for as much as six months, said Cansi. The global economy faces high inflation and low growth, which brings interruption to demand and trade, and indicates rising risks for the shipping sector, it added. Cansi highlighted the market plunge in the container shipping sector. This sector has contributed the lion’s share of the newbuilding orders since 2021. The sharp correction in freight rates has raised the prospect of delivery delays or even cancellations for boxship orders, according to analysts. The association called on shipping builders to invest more in employee training and recruitment. It warned of a need to prepare for risks in equipment supplies as well as foreign exchange fluctuation. It expects new ship orders placed in China to reach 40m-50m dwt in 2023, with flat growth in total orderbook size.