Global Shipbuilding Industry Set for Major Expansion Amid Aging Fleet Replacement
The global shipbuilding industry is poised for significant growth as the replacement cycle for aging vessels accelerates. A recent forecast indicates that over the next 15 years, approximately 46,000 new ships will be ordered. This surge in demand comes as the global order backlog for ships surpasses four years, driven by current production capacities. Analysts predict that the peak of this newbuild ordering cycle will occur in the mid-2030s, marking a transformative period for the industry.
The urgency for new vessels is largely attributed to the aging fleet, particularly those ships delivered during the 2009-2012 shipbuilding boom, which are now reaching their replacement window. Additionally, geopolitical tensions are reshaping logistics networks, prompting shipowners to expedite their newbuild orders. By vessel type, there is already a notable shortage of small liquefied petroleum gas (LPG) carriers, midsize container ships, and large liquefied natural gas (LNG) carriers. The demand for large bulkers and tankers is also on the rise, with projections indicating a 10% increase in seaborne trade volume by 2030.
China Dominates New Orders, Expands Shipbuilding Capacity
Chinese shipyards are currently leading the charge in new ship orders, capturing 80% of the global market share last month. This dominance is largely due to their competitive pricing and expanding production capabilities. According to Arrow Shipbroking Group, China’s annual shipbuilding capacity is expected to grow from 20 million compensated gross tonnage (CGT) in 2024 to 35 million CGT by 2028, nearing the current global capacity of 40.5 million CGT. In contrast, South Korean shipbuilders, while focusing on high-value vessels, are taking a more cautious approach to expansion due to past restructuring and labor shortages.
Chinese shipbuilders have been revitalizing yards that had previously ceased operations during the 2012 downturn. Over the next three years, they plan to further enhance their capacity by securing new docks and constructing additional shipyards. This strategic expansion has allowed China to dominate the global order backlog, holding 62% of the total 183.56 million CGT, compared to Korea’s 20%.
In the crude tanker market, the trend is similarly pronounced. Of the 91 crude tankers ordered globally in the first two months of this year, Chinese shipyards secured 69 orders, representing 75% of the total.
Korea, No. 2 in shipbuilding order by volume, looks to spur sales with container
Intensifying Competition in the LNG Carrier Market
While major South Korean shipbuilders have traditionally excelled in the LNG carrier segment, they are now facing intensified competition from Chinese counterparts. In January, Jiangnan Shipyard in China received orders for two large LNG carriers from East Pacific Shipping, while Hudong–Zhonghua Shipbuilding secured six vessels from TMS Cardiff Gas, a company that had previously relied on Korean yards for its LNG carrier needs.
Chinese shipyards are attracting clients by offering competitive pricing—approximately 10% lower than their Korean rivals. Furthermore, improvements in delivery timelines have bolstered their appeal. Hudong–Zhonghua has reportedly reduced the construction time for LNG carriers from 36 months to just 16 months by localizing key equipment.
Industry experts express concern that if South Korea does not maintain a technological edge in key ship types like LNG carriers, it may struggle to compete. The combination of lower prices and financial incentives from Chinese shipbuilders poses a significant challenge, prompting calls for South Korean firms to diversify their offerings and strengthen their competitive position in the global market.
