The bulk sector has received considerable attention in recent years and, whilst the smaller bulk segments are often overlooked, the Handymax sector has taken its largest share of bulker orders since 2000 in 1H 2013, 37% in numerical terms. Given this level of activity, June’s Shipbuilding Focus studies the pattern of ordering at the smaller end of the bulk sector.

Bigger and Bulkier
The Graph of the Month illustrates the increase in ordering in the wider Handymax sector (40-65,000 dwt) since the 1990s, peaking at 573 units of 33.6m dwt in 2007. These record levels of contracting were due to the global boom in commodity trade, largely driven by China. However, the recession of 2009 saw a drop in orders as the dry bulk sector took a double hit of weaker earnings and over-supply. Handymax contracting appeared to recover in 2010 but this was largely driven by Chinese investment in ships to transport commodities domestically. In 1H 2013, there has been a 59% y-o-y rise in the number of Handymax orders and, whilst lower than during the contracting boom of 2006-08, levels are firm.

Battle for the Bulk
Historically, Japanese yards have taken the majority of Handymax orders and have built 46% of the current fleet numerically. However, shipyards in China have grown their share of Handymax orders from 5% in 1996 to 69% in 1H 2013 and have output 36% of the current fleet. Whilst design innovation has typically come from Japanese yards such as Tsuneishi and Oshima, Chinese yards are now building Handymaxes of a larger average size than Japanese yards. In the y-t-d, Chinese ship-builders have won 69 Handymax orders of an average 62,701 dwt, with SDARI’s ‘Dolphin 64’ design particularly popular. Meanwhile Japanese yards have taken 21 orders of an average 59,047 dwt.

Bulking Up
The tendency over time to order larger ships is also shown by the graph. In the past, a ‘Handymax’ referred to a bulker of up to 45,000 dwt but Japanese yards began to market larger ‘Supramax’ designs of 52-60,000 dwt in the late 1990s. As in other sectors, the benefits of economies of scale saw Supramax orders outpace traditional Handymax contracts 3:1 by 1999. Apart from the 104 40-51,999 dwt Handymax orders in 2010, all of which were Chinese orders for shallow draft designs suitable to transit the Yangtze, there is little demand for units of this size now. Meanwhile, in the mid-2000s, 60-65,000 dwt Ultramax designs began to offer even greater ca-pacity than Supramaxes. Whilst Ultramax ordering has been relatively modest, the design has grown in popularity since 2009, when three yards took 11 Ultramax orders, and 13 yards took 79 con-tracts in 1H 2013. In light of this, Clarkson Research has amended the definition of a Handymax to 40-65,000 dwt (excluding Panamaxes built pre-2000).

Handy to Know
In general, Handymax designs have evolved since the 1990s and 98% of the units ordered in the y-t-d have been above 52,000 dwt. Clearly, it is not only the number of ships contracted that changes over time - there are also important design and size trends occurring within subsectors.