South Korea is home to the world's biggest shipbuilders including Daewoo and Hyundai Heavy Industries . The Seoul stock market's shipbuilding subindex has slumped 40 percent over the past six months versus a 10 percent drop in the overall market.
"Everybody is squeezed and banks are pulling back because of their concerns in Europe," Jens Martin Jensen, chief executive of Frontline, the world's largest independent tanker operator, told Reuters on Wednesday.
"The pressure is building. Yes, we will see more of this (delays and cancellations) going on, absolutely."
A glut of ships ordered when times were good have continued to hit the water this year, outpacing demand for commodities such as iron ore and coal in the dry bulk sector and crude oil in the tanker market, battering ship owner earnings.
Tougher trading has been compounded by global economic turmoil.
"The shipyards will continue to face calls from owners for delivery delays of existing ships as well as a weak pace of new ordering," said Nigel Prentis, head of research, consulting and advisory with HSBC Shipping Services Ltd.
"Either the owners do not want to take delivery in this poor market, or are unable to pay the delivery installment, or both. Banks are said to be trying to offload shipping and aviation portfolios. Ships are classified as risky assets, so it now costs banks more to lend to shipping."
Many European banks are restructuring and under pressure to shrink their balance sheets in response to tougher regulations requiring them to hold more capital against their loans, with many shipping firms in the funding firing line.
"With a contraction in bank lending, combined with a contraction in export credit agency support, shipbuilders will face a tough 2012," HSBC's Prentis said.
In November alone, South Korea's STX Offshore & Shipbuilding , the fifth biggest by order value, agreed to delay mainly European deliveries of 11 ships worth 1.5 trillion won ($1.3 billion), according to regulatory filings.
"There could be more order delays as business conditions are not expected to be good next year," said a spokesman for STX Group, a parent firm of the shipbuilder.
Even before the euro zone crisis deepened, Daewoo, Korea's second-biggest shipbuilder, received requests to put off the delivery of 13 ships worth 1.6 trillion won from an Asian customer and a European one.
Daewoo said the delays were not due to financing problems, rather that clients were changing the type of vessels they had ordered to better cope with slowing global trade.
"In the worst-case scenario, global shipbuilding could again be roped into the vicious cycle of reduced orders and requests for delaying deliveries, which the industry went through during the 2008 crisis," Daewoo Shipbuilding said in a recent regulatory filing.
Greek shipping company Eurobulk Ltd. said it had postponed an order for three ships.
"We don't have any idea when we will resume new build activity. Obviously we'll have to see how the financial crisis develops before we decide," Managing Director Marcos Vassilikos told Reuters.
South Korean shipbuilders are not the only ones squeezed.
In China, home to the world's largest industry by capacity, shipbuilders are struggling, with some smaller shipyards on the brink of bankruptcy as orders dry up due to global economic uncertainty.
Last month, Danish shipping group Torm canceled delivery of a tanker from a Chinese shipyard in a bid to "conserve cash".
"Most people who have new building programs are working to renegotiate, in the sense of delaying deliveries or canceling, or a combination," said Arctic Securities analyst Erik Nikolai Stavseth.
"Vessels on order are too expensive and require a much too high freight rate to justify taking delivery."
