For those with long memories, 1973 was the record contracting year for new vessels, with 129 mil. dwt ordered. Some of it was subsequently cancelled as a result of the energy crisis-that was the year in which the world woke up to the fact that oil would never be as cheap again. And, after some lucky tanker owners with ships in the right place at the right time had paid for them entirely in a couple of voyages, there followed a lengthy spell of massive tonnage oversupply, shipbuilding overcapacity, rock-bottom freight rates, foreclosures, bankruptcies and so on.

Thirty years later, almost 77 mil. dwt of new ships had been ordered by October, according to statistics from Clarkson Research, and there were no signs of a let-up in contracting activity. But, thirty years later, the industry backdrop is dramatically different this time round and, some believe, could provide the setting for a prolonged period of profitable operation on both the ship construction and vessel owning sides of the business.

What¡¯s different at the end of 2003? Well, the key issue is ship demand and, as 2004 dawns, there are buoyant markets across the board. There is no surplus of ship capacity in any of the major sectors. Asked recently by a German KG house to find some containership re-sales, a London broker spent four days scouring the market. Eventually, he reported to his disappointed client that he could find none. All contracted vessels were committed and not for sale.

Meanwhile, the dry bulk market is booming. Capsize rates are soaring as never before, fuelled largely by Chinese demand for iron ore, coal and grain. The tanker market, although more volatile, has seen record rates for many vessels fixed spot, with some VLCCs breaking the $100,000/day barrier. And the container market goes from strength to strength as carriers vie with each other for larger and larger mainhaul vessels. Again, China is a fundamental driving force, with its relatively cheap exports filling container vessels both across the Pacific and westwards to Europe.

However, it is not simply rising volumes of seaborne trade that are leading to such buoyant demand. There are regulatory issues, too. The legacy of the Erika and the Prestige has resulted in a raft of new regulations on the construction of tankers, which has inevitably hastened the contracting of new compliant tonnage and the phasing out of older units. New bulk carrier regulations, while not as severe, may also have an impact, as older ships become less attractive to charterers.

On the containership front, the drive for size appears to have no limits. While yesterday¡¯s 5,000 TEU giants were seen as the next generation of arterial container vessels, their primacy has been short-lived. Ships with a capacity of more than 10,000 TEU have already been ordered and classification societies are already preparing for vessels in the 12-15,000 TEU range. Some experts believe that such vessels will be plying the mainhaul container routes within the next five or six years, presumably rendering large numbers of ex-arterial vessels, of less than half the capacity, operationally obsolete.

However, as shipbuilders toasted their good fortunes at the turn of the year, there was one issue on everyone¡¯s lips. For the first time in most people¡¯s memory, the world¡¯s shipyards are full and will remain so for almost the next three years. It does not take an economist to work out what happens in such circumstances. New ship prices are rising dramatically. VLCC prices have risen by more than 20% over the last 12 months or so, with a current price tag of around $76 mil.; 47,000 dwt products carriers, at about $31 mil., cost a similar margin more; and Capsize bulkers, not far short of $50 mil., have gone up by 35-40%.

The writer is a journalist based in the UK.