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Global and Regional Commercial Shipbuilding Market Recent Developments

Throughout 2020, COVID-19 put a severe strain on the global shipbuilding and maritime equipment sector, with European shipyards and equipment manufacturers being hit harder than in Asia.

In value terms, global investment in newbuild tonnage was historically low, totalling 44.9 billion USD in 2020 (down by 40% from 2019). The ordering freeze was prominent in the high-tech, “niche” segments where European shipbuilders are active. For example, global investment in newbuild cruise and ferry ships accounted for only 1 billion USD (2% of total value of investment in new ships in 2020), i.e. down 96% from 2019.

Before Covid-19, Europe’s complex shipbuilding industry was doing better than global merchant shipbuilding industry, namely in Asia, which was suffering from significant overcapacity, weak demand, flattened trade growth. European shipbuilding had been able to decouple itself from the global shipbuilding market by successfully focusing on the healthier high-tech niche segments like cruise ships, ferries and other specialised non-cargo carrying vessels, after having lost cargo shipbuilding to Asia in the previous decades. For several years, European yards’ order intake surpassed output volumes. Covid-19, however, has hit Europe’s complex shipbuilding markets much harder than all global shipbuilding segments.

Shipyards’ output was also more severely impacted in Europe than in the rest of the world, down by 27% from 2019. Facilities in many European countries were closed temporarily in March-April 2020, as governments enforced ‘lockdown’ measures. Many yards gradually resumed production in May-June 2020, but still faced construction delays on several ships on order while trying to secure financing for a continuation of their activities on existing ship.

In contrast to Europe, most Asian shipowners place their orders for new ships “domestically”, especially in crisis periods. In 2020, for instance, Chinese shipowners ordered close to 100% of their ships at Chinese shipyards, whilst South Korean shipowners placed 91% of their orders domestically and Japanese shipowners approximately 70% (which was reportedly a massive domestic order of ships). This situation is in sharp contrast with Europe, where European shipowners only placed 5% of their orders in the EU, compared to 95% of their new orders placed in Asia. This contrast can, amongst others, be explained by the fact that the national policies in China, South Korea and Japan link shipping and shipbuilding, both sectors being considered as strategic for their country. This strategic dimension is also reflected in the destination of the orders of Asian shipowners, i.e. they place most of their new orders in shipyards of their own nationality.

Source: SEA Europe based on IHS data