This is the final editor’s comment for DPC as publisher IHS Markit has decided to close the magazine and web presence. It is published at a time of uncertainty; where a virus determines the daily lives of most of us around the world. So far, however, dredging and other infrastructure projects have not needed to be cancelled and are still under way.
At the end of April, CEDA published a statement, “dredging projects are often vital for the logistic networks of a country, providing access to lifesaving goods and products as well as being important for their economic growth and safety. In support of this, several countries have declared maritime projects as essential and requested the project teams to continue with the work”. The statement continued, “Our members confirm that they are able to meet these requests and succeed in continuing their operations, taking into account social distancing and several quarantine measures to protect staff, crew, and employees.”
For projects to continue unhindered, however, is contingent on the economic impact the virus has on the world’s economy and consequently the maritime and dredging industry. The US, Europe, and Japan are headed for recession. The IHS Markit forecast for world GDP growth in 2020 is to fall to 0.7% in response to the spread of the virus from a predicted 2.7% at the end of 2019. Growth below 2.0% is classified as a global recession.
Such a recession will undoubtedly impact vessel deliveries and the future capacity of the dredging industry. IHS Markit data shows that around every 10 years, there is a spike of dredging vessels coming into service. We saw a similar spike at the end of the 1980s, the turn of the century, and then from 2010 onwards, with it presently slowing down.
Analysis also shows drops in vessel orders during and shortly after a financial crisis. Taking the most recent financial crisis of 2008 into account, there was a dip in orders in 2009. Recovery takes time, with the dredging industry experiencing a peak for vessel deliveries in 2016, with 51 ships that entered into service. Most of the contract dates for these orders, however, go back to 2010. As a comparison, merchant shipping orders only began to grow from 2013. This could suggest that the dredging industry is more resilient than merchant shipping, and gives us hope that the dredging industry might again manage a quick recovery after the world begins healing from the impact of the virus.
The dredging industry has a strong orderbook. There are 34 dredgers currently on order or that have recently been delivered. Orders of trailing suction hopper dredgers (TSHDs) suggest that we will see a lot of high-capacity dredgers enter the market until 2021. Four vessels with a hopper capacity of 15,000 m3 and above will be operational. There are also 15 TSHDs with a capacity between 8,000 and 15,000 m3 that will be joining the fleet, in addition to 19 TSHDs that have a capacity below this threshold.
To put these numbers in context: 55% of the current fleet is flexible and used for three categories: maintenance; capital; or aggregate dredging. The rest is split into 15% that only do maintenance dredging; 25% that only do capital dredging; and 5% that solely do aggregate dredging. Most of the dredging fleet consists of mid-size TSHDs. While the mega-capacity ships are focussed on capital dredging works, the mid-sized vessels cater to capital, service, and aggregate dredging. Most small hoppers are owned by individual ports for maintenance dredging.
Considering that merchant shipping is also facing uncertainty due to the coronavirus, it will be interesting to see if the dredgers coming into service will find themselves in high demand, for example, to facilitate the entry of larger container and cruise vessels at various world ports. In any case, the flexibility of the dredging fleet will make it easier to deal with the fallout of the COVID-19 outbreak.
To quote an old saying, “It is only certain that nothing is certain.” While this might be the last call for DPC magazine, it is not the end of dredging coverage at IHS Markit. As the publisher of the International Association of Ports and Harbors’ member magazine, Ports and Harbors, and with me as its editor, I am sure our paths will cross again as we cover news and updates on dredging; the vital sector that allows the maritime industry to navigate through hard times and better days.