The global naval vessel maintenance, repair, and overhaul (MRO) market was valued at USD 54.67 billion in 2022. It is projected to reach USD 64.76 billion by 2031, growing at a CAGR of 1.90% during the forecast period (2023-2031).
Naval vessels maintenance repair and overhaul (MRO) is the process of restoring a naval vessel to a state in which it can perform at its optimum best. To increase a ship's lifespan, the MRO market for naval vessels often entails overhauls, maintenance, inspections, routine checks, repairs, and modifications. Throughout their lifespan, naval warships are subject to recurring upkeep. The platform and the type of repair work to be done determine the infrastructure and facilities needed for maintenance at any given time. Additionally, the recent reduction in military spending by many nations and the slowness in governments' ability to make purchasing decisions have made naval vessel MRO even more crucial.
The structure of the international security system has been compromised by expanding hegemonism, unilateralism, and power politics, which have fueled multiple global crises due to the fundamental changes in the international strategic environment. Several modernization efforts are presently underway to increase the capabilities of the regional naval forces to respond to security threats efficiently and complete urgent, crucial, and risky strategic missions. This will ensure that the existing naval systems are combat-ready. China has increased its maritime presence and built military bases on artificial islands around Asia-Pacific.
Other regional claims, including Japan, South Korea, the Philippines, and Vietnam, have been more forceful. The United States, on the other hand, has increased its military activities and naval presence globally. As a result, the rivals of these superpowers have strengthened their naval fleets to fend off external influence and maintain military readiness. Additionally, there is escalating hostility between Russia and Ukraine in the Black Sea. The purchase of naval warships from the surrounding European countries has escalated due to these tensions.
Any purchase or modernization program needs a sizable amount of defense spending. To maintain long-term improvement projects, military procurement activities must simultaneously develop cutting-edge technologies that can boost capability and reliability. Governments must spend more of their GDP on defense due to the hefty expenses associated with modernizing or upgrading naval warships to integrate the newest technologies. This aspect is anticipated to pose a hurdle to market expansion across several nations during the forecast period, as countries intend to allocate their dwindling financial resources based on immediate priorities. The large-scale naval vessel modernization and upgrading plans of numerous governments may need to be scaled back, canceled, or delayed due to shifting financial priorities, impacting the market prospects during the projected period.
Several naval ships have had their lifecycles extended, and their capabilities improved through mid-life upgrades. After 15 to 20 years of operation, most nations choose mid-life modifications to prolong the useful life of their naval fleets. Many countries have decided to update their naval ships and submarines in the middle of their service lives due to the increasing necessity to retain a sizable naval fleet for various missions. The two M-frigates the Portuguese Navy purchased in 2009 will now undergo mid-life upgrades, extending their operational life to 2035. Weapons, sensors, and communication system enhancements are being made to the two ships, and the propulsion and power distribution systems are also being examined. These overhauls are the responsibility of the Dutch shipbuilder Damen. By 2022, the second ship should have finished construction. The eight Anzac-class frigates of the Royal Australian Navy also receive mid-life improvements. The work is being done in Henderson, Western Australia, at the BAE Systems Australia site. By the beginning of 2024, the eight ships' upgrade programs should be finished.
The global naval vessel maintenance, repair, and overhaul (MRO) market is segmented by vessel type and MRO type.
Based on vessel type, the global naval vessel maintenance, repair, and overhaul (MRO) market is bifurcated into submarines, frigates, corvettes, aircraft carriers, destroyers, and other vessel types.
The destroyer segment is the highest contributor to the market and is estimated to grow at a CAGR of 2.25% during the forecast period. Destroyers are swift, nimble, long-endurance destroyers that protect larger auxiliary ships in a fleet from attacks by more potent, close-range surface combatants. There are about 250 destroyers in the world's fleet at the moment. Nations like the United States, China, and Japan own most of the world's destroyer fleet. Only a small number of navies employ destroyers globally due to their high acquisition and maintenance expenses. Countries all around the globe are investing in the modernization of their fleets with cutting-edge machinery and in-service maintenance and repair plans as the average age of destroyers in the global fleet rises. Destroyer modernization initiatives are required due to the increased need for the newest weapon systems to be installed on the more contemporary destroyers. Countries are also investing in maintaining the current destroyer fleets by modernizing outdated ships with more modern techniques and extending their useful lives. The DDG-51 Arleigh Burke-class Flight IIA destroyers of the United States' current fleet began receiving upgrades to their sensors, electronics, and missiles in 2021. Over the course of the projection period, these advancements are anticipated to fuel the segment's expansion.
A vessel that serves as a seagoing airbase and has a full-length flight deck and areas to store, equip, deploy, and retrieve aircraft is known as an aircraft carrier. The largest warships in the navy fleet are aircraft carriers since they need a lot of deck space. Aircraft carriers must have defensive capabilities to safeguard many aircraft and crew on board. Purchase, operation, and maintenance costs for aircraft carriers are high. The operating expenses of the United States' supercarriers, among the most sophisticated and modern in the world, exceed USD 1 billion annually. Although they are less expensive, tiny aircraft carriers have a hefty price tag, preventing widespread use in many nations. Only eight countries currently have aircraft carriers in their naval forces. There are more than 20 aircraft carriers, with the United States now controlling more than half of the world fleet.
Based on MRO type, the global naval vessel maintenance, repair, and overhaul (MRO) market is bifurcated into engine MRO, dry dock MRO, component MRO, and modification.
The dry dock MRO segment owns the highest market and is estimated to grow at a CAGR of 1.86% during the forecast period. A naval ship's dry dock MRO includes extensive system and vessel body repair maintenance. Every year, maintenance is carried out, which involves carefully examining a naval vessel. This also provides personnel access to the hull, propeller, rudder, and other items submerged in water and ordinarily out of reach while sailing. In response to the rising need for MRO for naval vessels, some nations are improving their domestic dry dock MRO capacities. The Indian government opened Mumbai's largest state-of-the-art dry dock, capable of docking aircraft carriers, for the Indian Navy in September 2019. The dry dock, which is 281 meters long, 45 meters wide, and 16.7 meters deep, will allow for the simultaneous docking of many ships, including two submarines. Repairs to the cruiser included modernizing the weaponry and support systems and the mechanical systems and boost propulsion units. The naval forces must spend a significant amount of money on such extensive repairs of naval vessels, enhancing the profits for the dry dock MRO industry.
One of the most crucial jobs done on board a military ship is Naval Engine MRO. The main engine makes up more than 30% of the engine room's total machinery cost. Therefore, maintaining it is crucial from a financial and strategic standpoint. Any severe damage will result in a significant financial loss and cause the vessel to idle, reducing fleet preparedness. Repairing and performing standard maintenance inspections on naval vessel engines are regular maintenance procedures to prevent breakdown. Naval engines face numerous problems when operating in maritime situations. The seas are very warm or cold, and local temperatures vary widely, necessitating more maintenance work during longer journeys. The expanding naval fleet and the rising demand for engine MRO aid revenue growth for the engine OEMs.
The global naval vessel maintenance, repair, and overhaul (MRO) market is divided into four regions: North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific is the most significant revenue contributor and is expected to grow at a CAGR of 2.31% during the forecast period. Increasing demand for the purchase of new naval vessels and expansion of the MRO market is caused by China's rapid retirement of older, single-mission warships in favor of larger, multi-mission ships outfitted with cutting-edge anti-ship, anti-air, and anti-submarine systems, sensors, and command-and-control networks. Two aircraft carriers are already in operation in China, and two more are being built at the Jiangnan Shipyard not far from Shanghai. By 2023, both are anticipated to be prepared for battle. It is expected that this new aircraft carrier will be China's first to feature an integrated electric propulsion system, an improvement over previous carriers built in the Soviet Union, and an electromagnetic launch system for planes. The demand for improved in-house MRO capabilities is anticipated to increase due to such technical improvement. The South China Sea conflict and rising international tensions could significantly accelerate the market.
As part of the modernization and growth of its marine forces, the Indian Navy has been building homegrown platforms, systems, sensors, and weapons. The Indian Navy has one aircraft carrier, one amphibious transport dock, eight landing ship tanks, ten destroyers, thirteen frigates, one nuclear-powered ballistic missile submarine, sixteen conventionally powered attack submarines, 23 corvettes, eight landing craft utility, ten sizeable offshore patrol vessels, five fleet tankers, as well as numerous auxiliary and small patrol boats as of July 2021. Both publicly and privately owned ships are being produced in Indian shipyards. However, some projects have had costly overruns and protracted delays. To resist superiority, the region is also proactive about purchasing naval ships from other nations.
North America is expected to grow at a CAGR of 1.94% during the forecast period. With numerous more either in the planning and ordering phase or under construction, the U.S. navy now has approximately 490 ships in its active service and reserve fleet. To create a more distributed fleet design with a smaller percentage of larger vessels, a more significant percentage of smaller ships and a new third tier of huge, autonomous vehicles, the Navy and the Department of Defense have been working together. With a mix of service life extensions and new construction, the Navy has been actively undertaking force structure growth plans to meet its 355-ship goal by F.Y. 2034. The U.S. Navy's fiscal year 2022 shipbuilding plan would cost over USD 30 billion per year through 2052 to expand its fleet size of human and unmanned vessels. Over the next ten years, the United States will produce a sizable need for MRO activities due to the fleet increase and preparedness strategy.
Additionally, the Canadian Navy has given Saab a contract for multi-role Sea Giraffe AMB naval radar antenna kits to modernize the Halifax-class frigates of the Royal Canadian Navy. The work began in Halifax, Canada, and Gothenburg, Sweden, in 2021 and will last through 2026. In addition, Canada's fleet has grown with the mid-2021 commissioning of HMCS Harry DeWolf. In the last quarter of 2022, another ship of the same class is anticipated to be commissioned. These modernization initiatives will continue to dominate the Canadian MRO market for navy vessels throughout the projected period.
Europe will have a sizable market share and a significant growth rate due to its extensive coastline. Over 12,000 kilometers of the coastal line must be maintained in the nation. The U.K. As more people cross the English Channel every day, the country needs to deal with border protection and crisis management, which has allowed them to remain watchful and maintain their navy boats prepared for missions. The region's initiatives to improve functional skills and adapt their current fleet promote MRO business potential. These actions were done in response to the U.K. Defense Committee's study, which stated that over the next few years, the nation needed to treble its escort fleet and expand the number of its attack submarines.
The collision of a Russian submarine with a warship of the Royal Navy has increased tension between Russia and the U.K., raising the possibility of a dramatic increase in the MRO market. Even though the collision was an accident, both nations have increased their naval defense capabilities. As of August 2021, the South China Sea territorial dispute between Germany and China has grown, allowing the countries to send warships and join the west in escalating their military presence there. For the first time in almost two decades, the action was taken. The nation intends to dispatch extra navy ships to the area. The South China Sea's active naval vessel operations have strengthened governments' attention to MRO activities, boosting business potential.
Its naval reach would be increased by constructing additional bases in Assad and Berbera, supported by consistent financial support. In the upcoming years, the UAE Navy is more likely to purchase brand-new surface ships and relatively expensive equipment. The program significantly affects the local MRO sector for navy vessels. There has been an increase in strategic collaboration between regional and international shipbuilders due to the possibility of prospects for capability expansion.
The United Arab Emirates awarded France's Naval Group a USD 850 million deal for two Gowind corvettes, with the option to purchase two more in the future. The corvettes will be constructed in collaboration with the ADSB. They will be outfitted with the Evolved Seasparrow Missile from Raytheon, the Exocet missile from MBDA, and the SETIS combat management system from Naval Group. Three Al-Riyadh, four Madina, three LCU, two LCM, and two Boraida fleet replenishment ships make up Saudi Arabia's active fleet. Saudi Arabia is now working on a massive effort to update its military, concentrating on the Royal Saudi Naval Forces (RSNF) by launching the Saudi Naval Expansion Program (SNEP II) and investing USD 20 billion to modernize its aging East Naval Fleet. Saudi Arabia, on the other hand, has very little expertise in shipbuilding and MRO, in contrast to the United Arab Emirates. Therefore, cooperation and support from other countries are essential for developing the nation's naval vessel sector.
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