The global shipbuilding market was valued at USD 138.93 billion in 2021. It is projected to reach USD 181.57 billion by 2030, growing at a CAGR of 3% during the forecast period (2022-2030).
Shipbuilding involves building large sea-going vessels using steel or other materials, including wood and composites. Manufacturing ancillary marine equipment, such as sails, motors, electronics, and other fittings, is a component of shipbuilding and boatbuilding. Construction of ships and other floating boats is known as shipbuilding and is often done in a facility known as a shipyard. Prefabricated pieces are widely used in modern shipbuilding. In shipbuilding, large, multi-deck sections of the hull or superstructure are built, brought to the dock or slipway for assembly, and then lifted into position. In order to reduce the amount of work required to assemble or install parts deep within the hull once it has been welded together, the most modern shipyards pre-install machinery, pipelines, electrical cables, and other components within the blocks.
Trade growth has been one of the hallmarks of the global economy in recent decades, and maritime transport is the backbone of international trade. The market for ships is mainly influenced by naval trade. The expansion of supply chains and the opening of new markets made possible by maritime transport have sparked the economic growth of many countries worldwide. It is estimated that around 90 percent of all freight is transported by sea. As a result, nations that rely significantly on ships drive up the market for shipbuilding.
About 85% of the shipbuilding activity was concentrated in China, Japan, and South Korea. The most popular marine vessels utilized for trading activity are cargo ships. The need for maritime transportation has grown over time, which has led to a growth in the volume of imports and exports globally. With globalization firmly established at the core of many economies, opportunities for international trade of goods are expanding, offering a superior selection of commodities at various price points. The increasing sea trade between countries will likely drive the shipbuilding demand over the forecasted period.
The workforce's consistency has a significant impact on the rise and fall of the shipbuilding sector. In addition, the lack of resources has recently caused the shipbuilding industry to suffer due to the industry's lack of new hires and the aging of the labor force. The youth workforce is predominately choosing white-collar careers as their careers of choice, creating a labor shortage. According to a recent interview with the general manager of the BAE Systems Ship Repair yard in Florida, the majority of the professional managers and workers are retiring, and the average age of BAE Systems Ship Repair yard employees is 55. Variations in the yard's workflow also impede the expansion of the shipbuilding industry. In another interview, the president of the Virginia Ship Repair Association remarked that the enormous workplace strain on the employees makes it difficult for them to retain and hire new employees, which affects the business.
More than four-fifths of all global merchandise commerce is conducted via the maritime route, making marine transport the foundation of globalized trade and the manufacturing supply chain. Trade volume has expanded with a growth rate of over 10% during the previous ten years. The rise in consumer demand in emerging countries can explain the substantially more significant growth in import volume. There has been an increase in maritime transportation demand over the years, which has increased global import and export activity. With globalization firmly established at the core of many economies, opportunities for international trade of goods are expanding, offering a superior selection of commodities at various price points. 75% of European commodities come by sea from external partners, making shipping the most economical method of moving goods from source to buyer.
The global shipbuilding market is segmented by type and end-user.
Based on type, the global market is bifurcated into vessels, containers, passengers, the other types.
The vessel segment is the highest contributor to the market and is expected to grow at a CAGR of 4.97% during the forecast period. Bulk carriers, general cargo vessels, livestock vessels, and other vessel types are the vessel types. Food grains, ores, coals, cement, and other dry and loose goods are transported by bulk carriers. The dry bulk freight rates have stayed consistent because these commodities do not require specific packaging and have allowed for more adaptability across the major economies. For instance, the bulk carrier "Market Cooper" was delivered by Japanese builders Kawasaki Heavy Industries (KHI). In addition, Kawasaki and China COSCO Shipping Corporation collaborated to build the 61,000DWT ship at Nantong COSCO KHI Ship Engineering (NACKS). The market for bulk carriers has drawn a lot of investors despite the low freight rates and technical difficulties in inspecting and delivering boats.
Most shipbuilders are currently focused on reducing carbon emissions as major shipbuilders invest in cleaner technologies to reach the target of zero emissions from operations. A solid oxide fuel cell (SOFC) prototype system with a 50-kilowatt output is one of the innovative environmentally friendly technologies found on the LNG-powered cruise ship MSC World Europa. SOFC technology can reduce greenhouse gas emissions by roughly 30%. By 2022, the LNG Cruise ship, which will be constructed in France, is expected to begin operations. The main participants focus on increasing overall ship safety, lightening the burden for the crew, and lowering operating costs. The development of new technologies for shipbuilding, such as artificial intelligence, uncrewed intelligent ships, and environmentally friendly technology, is bringing together businesses.
Based on end-user, the global market is bifurcated into transport companies, military, and other end-users.
The transport companies segment owns the highest market share and is expected to grow at a CAGR of 4.85% during the forecast period. Transport companies in the shipbuilding market account for the largest share, owing to the increasing demand from the freight and logistics sector. Container deliveries increased while deliveries of new dry bulk carriers and oil tankers decreased internationally. In contrast to prior years, new chemical tankers, gas carriers, and cargo ships were delivered at a higher rate. The sale of new ships can be proportionally correlated with expanding particular ship classifications. A requirement of more recent legislation is the establishment of sulfur emission control zones (SECA), where levels of sulfur emissions must be lower than those made possible by burning the HFO that is currently available. As a result, while transiting the SECA, the vessel could need to either install a scrubber system to remove sulfur from emissions or convert to a more expensive low-sulfur distillate fuel, opening up new market prospects.
The quick increase in defense spending primarily drives the military segment. Additionally, rising geopolitical tensions and maritime conflicts between various nations are crucial in procuring naval ships. Since many countries are eager to purchase new destroyer ships, the demand for desecrators is now greater than that for other naval vessels. Countries intend to increase their maritime force by purchasing new ships, necessitating ongoing maintenance and repair work. The escalated tensions between the countries in this region have led to an increase in military spending and spending on their naval fleets, which may boost the market's growth.
The global shipbuilding market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific is the most significant revenue contributor in the global shipbuilding market and is expected to grow at a CAGR of 4.93% during the forecast period. India has roughly 28 shipyards spread across several states, and its 12 largest ports handle about 61% of the nation's total cargo volume. Furthermore, in the military, nearly 70% of the capital budget has been spent on domestic goods during the past five years, with more than 60% of the naval budget allocated to capital expenditures. The country's leading naval vessel makers, including Cochin Shipyard Ltd. (CSL), Hindustan Shipyard Ltd. (HSL), Mazgaon Dock Shipbuilders Ltd. (MDSL), Alcock Ashdown Ltd. (AAL), and Reliance Navy & Engineering Ltd. (RNEL), have an order book of more than 180 naval vessels.
Additionally, China has a significant proportion of the global market in terms of delivery orders and order books at 43.1%, 48.8%, and 44.7%, respectively, according to China's Ministry of Industry and Information Technology (MIIT). China is swiftly retiring older, single-mission warships in favor of larger, multi-mission ships outfitted with cutting-edge anti-ship, anti-air, and anti-submarine capabilities, sensors, and command-and-control networks. China is moving forward with its military modernization plans amid territorial and maritime disputes. These factors are anticipated to drive the shipbuilding market over the forecast period.
Europe is expected to grow at a CAGR of 4.80%, generating USD 3.41 billion during the forecast period. The German government places a significant emphasis on international trade. A strong and globally competitive maritime sector is essential for the economy since it boosts Germany's competitiveness and supports growth and employment. Around 2,800 businesses are engaged in the shipbuilding and ocean sectors, and around nine shipyards assist the German naval shipbuilding industry. It produces an estimated 85% domestic value on deliveries from German shipyards. The United Kingdom prioritizes maritime security, which has become even more important since the country decided to exit the European Union. Nearly 95% of all imports and exports from the UK travel by sea via more than 400 British ports. Rich fishing grounds, vital infrastructure like underwater cables, oil rigs, wind farms, and seven coastal nuclear power plants are all in UK waters.
North America is anticipated to grow steadily over the forecast period. The US shipbuilding sector has been losing ground due to various issues, including intense international competition supported by government subsidies, government cargo decline, and commercial ship orders. In the United States, there are over 120 shipyards engaged in shipbuilding activities, and the government is currently the domestic shipbuilding industry's largest client. Due to a drop in demand and a widening gap between domestic and foreign shipbuilding productivity and cost, US commercial shipbuilding of big merchant-type ships fell. Few of the nation's leading commercial shipyards rely only on the limited domestic market. In addition, the government signed a long-term strategic agreement with two Canadian shipyards, namely Irving Shipbuilding Inc. (Halifax) and Seaspan's Vancouver Shipyards Co. Ltd (Vancouver), for the construction of combat and non-combat naval vessels for the Royal Canadian Navy and non-combat vessels for the Canadian Coast Guard, to support the government's plans to build a large vessel fleet.
Foreign participation in Brazilian shipyards is not prohibited, and the country's shipbuilding sector is open to foreign interests. There are not many restrictions on foreign capital investment in Brazil that are mentioned explicitly in the legislation, like in the case of the fishing business. Brazil offers favorable ship construction agreements in addition to luring international investment, which further aids in accelerating the growth of the domestic shipbuilding sector. Most shipbuilders in the UAE prefer to subcontract some of their work to different Asian shipyards. The nation's shipbuilding sector supports the maritime industry throughout the entire Gulf area by generating jobs for the local population in the maritime technology sector and educating the populace about the nuances of the marine industry.
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