Shipbuilding Trends on the Global Stage

Shipbuilding Trends on the Global Stage

 

Shipbuilding is a highly competitive market and also one of the oldest in the world. Companies in the shipbuilding industry have to overcome peaks and slumps of the economy and the recent crisis of 2008 have hit the shibuilding industry quite badly. If you are someone working in the shipbuilding industry, it is important that you are aware of the shipbuilding trends on the global stage.

The global order book over the past one and the half years since the financial crisis in the end of 2008 was 4.5 times lower than that for the 6 previous quarters. In 2009, the portfolio of new orders of European shipyards was almost 4 times lower than that in the year 2008. This is such a huge decline that we can say that the world’s shipbuilding industry is one of the worst affected sectors since the financial and economic crisis. With the bigger than ever fleet available and very little demand for their services this industry is going through quite a harrowing period.

Until the middle of the last century, the Europeans have been dominating the world in the shipbuilding arena. The speedy growth of Japan’s economy also saw Japan doing many partnerships with the Europeans and together they dominated the shipbuilding industry. In fact the two countries controlled 90% of the market for quite some time until the land of the rising sun overtook the Europeans.

However, come the 1970s, South Korea begin to lock its eyes on the shipbuilding industry and made the proclamation to the world that it is going to venture into the ship building industry in a big way. South Korean took the leadership in the industry as it was very focused in gaining true market share in it and it is helped by its low labour costs.

The next Asian player to come up to the fight is China. They managed to expand furiously and took over Japan in 2006 and South Korea in 2009. This conclusion is measured by order book volumes. China’s ascent wasn’t without challenge. We saw new shipbuilding competitors to China in the form of Vietnam, India, Turkey, the Philippines, Brazil, and Russia. They managed t o grow their share of the shipbuilding industry on the global stage and cumulatively their quantity of orders managed to equal that of Europe’s. Europe have not been able to counter the aggressive challenges from the Far East even though they had a strategic position in a niche area.

The Asian shipyards have been accused of unfair practices but it also has advantages like cheaper labour and available raw resources to make them a force to be reckoned with in the shipbuilding industry. This intense competition between the two continents have not helped improved the crisis effects on the industry. It is well known now that September 2008 marked the end of the ship building rally which started in 2003. No one was spared, neither the newcomers The crisis didn’t spare the newcomers nor the leaders. Even with some signals of recovery at the end of 2010, the order books for new ship builds continue to decrease.

Nevertheless, for every down swing there will be an upswing, albeit it could be a gradual one. The players in the ship building industry should continue to look for ways to increase their efficiency and lower their cost in order to ride the up swing that is coming over the next decades.

If you would like to learn more about the ship building industry, here is a great article about the ship building industry and it takes you years back into the pass so that you can have a better understanding of the ship building industry overall. Article on Ship Building