The price of Shipbuilding increased by New Regulations

According to Vietnam Register data, Vietnam's fleet currently has more than 530 international fleets. Since the beginning of 2017, more than 110 ships have been built to replace the old fleets that returned domestic or sold for demolition. The number of international ships has decreased significantly, so the construction of new ships to complete the fleet is necessary. However, the new regulations and new conventions that Vietnam acceded will have impacts on shipyards, causing the increase of shipbuilding prices.

According to the international regulations that Vietnam participates in, ships that have contracts for construction from January 1st, 2017, order or major changes from January 1st, 2017 must comply with the provisions on energy efficiency index; contracts from July 1st, 2014, signed from January 1st, 2015, handed over from July 1st, 2018 must comply with regulations on noise control on board; ships ordered from August 20, 2013 must comply with the regulations on crew living room area.

(Source: Internet)

In these regulations, the regulation on noise criteria on board is very difficult to predict and ensure from the design stage, because it depends on the experience, level of knowledge about noise and noise reduction of the design company, quality of machinery, equipment of the supplier, quality of shipbuilding. Meanwhile, currently in Vietnam, there is no test tank that meets the testing standards to test the model of dynamic systems, propellers for setting a basis for the calculation to confirm conformity.

According to the International Convention on Ballast water and sediment of Ballast Water Control (BWM 2004), newly built ships from September 8, 2017 must meet model test conditions from the design of the ship. This is a difficult point for Vietnamese shipyards to hire foreign models for testing. Now, according to this new regulation, if the calculation is not standardized from the design stage, it must be hired to test the model many times, causing more costs, increasing the cost of shipbuilding.

(Source: Internet)

International Convention for the Prevention of Pollution from Ships Caused by 1973, as amended by Protocol 1978 (MARPOL Convention 73/78) will come into effect for Vietnamese ships from January 1, 2019 is stricter in controlling energy consumption from the time of designing and building ships. Recently, for oil tankers, the single-decker ships are no longer used for international shipping routes.

 In the previous years, shipyards received many new shipbuilding orders. But after placing orders to deploy the first stage, even ships that have just been ordered have been left unfinished because the market is too deep, ship owners have difficulty in capital. Recently, these ships have been re-started, continued to build to complete with modification, conversion for newly purchased ship owners to change into oil tankers and chemical tankers. Because these ships were ordered before September 8,2017, they are not subjected to the testing of ship models since the design of BWM 2004.

(Source: Internet)

These ships will be put into domestic service, international ships will still be governed by the above convention, so the equipment in accordance with the provisions of the convention must still be implemented. In fact, from around 2012, none of the newly built ships at Vietnamese ran international routes.

A large number of ships built in the golden age of the shipping industry (previous years 2008) are now old and much damaged. Recently, the market has shown signs of increasing, demand for goods has increased, the freight is also increased. Therefore, the demand for building new international ships also increased.

The BDI (Bantic Dry Index) has recently improved significantly, reaching more than 1,300 points in the long run which is also a driving force for shipbuilding.

Demand for shipbuilding increased while international regulations became more and more stringent, which made shipbuilding costs increase, caused difficulties for Vietnamese shipyards.

(Source: Saigon Times)

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