3.1 Introduction

The post-war era has seen numerous periods in which global shipbuilding has experienced either ‘boom’ or ‘bust’ market conditions. During such periods demand for new ships has either increased or declined rapidly in response to changes in global transportation needs. The most pronounced of recent global market movements occurred in the early part of this century which, in the period between 2005 and 2008, saw huge increases in world demand for new vessels and the prices of newbuilding tonnage, followed by a cataclysmic market collapse as a consequence of the 2008 ‘credit crunch’ and subsequent global economic recession. In 2010, the Organisation for Economic Co-operation and Development (OECD) reported that global shipbuilding orders had fallen from a total of 22.2 million cgt (compensated gross tons) in the third quarter of 2007 to just over 1 million cgt in the last quarter of 2008 and the first quarter of 2009, a fall of some 90 per cent in under two years.2 Much of the new shipbuilding capacity which had developed in Asia, particularly in China, in 2005–2008 proved in consequence surplus to requirements; world order books remain very ‘thin’ and newbuilding prices in many vessel sectors continue to decline.