Shipbuilding is a complex and multifaceted industry that plays an important role in world trade and transportation. The process involves the design, construction and launching of ships, from small boats to large ocean liners. The global shipbuilding market was valued at $138.9 billion in 2021 and is projected to reach $181.6 billion by 2030, growing at an average CAGR of 3% during the forecast period (2022-2030).
Modern shipbuilding is the backbone of international trade. It provides cargo transportation across oceans and connects markets from all over the world. Maritime transport takes a significant share in the cargo turnover of most countries. Its share has gradually increased and has hardly decreased from 52% to 62%, which emphasizes the key role of this sphere.
Growing international trade and the need for efficient transportation of goods are driving demand for cargo ships and container vessels. Increasing offshore oil and gas exploration and production activities are also increasing the need for marine transportation. Apart from commercial shipping, shipbuilding supports important industries such as defense and tourism. Naval vessels provide security at sea, and demand for waterborne tourism drives the construction of luxury cruise ships. Shipyards where ships are built or repaired create many jobs for professionals ranging from welders to design engineers, managers and logisticians. The importance of shipbuilding extends far beyond creating jobs and revenue for nations – it has an impact on global supply chains.
1. Economic: according to the United Nations Conference on Trade and Development (UNCTAD), the value of the world’s fleet in 2019 was estimated at $1.2 trillion. The industry drives commerce and contributes to a country’s GDP.
2- Environmental: the shipping industry has an impact on the environment and it is important to ensure that ships are built sustainably. The International Maritime Organization (IMO) has implemented regulations to reduce the environmental impact of this sector – Energy Efficiency Design Index (EEDI) and Ship Energy Efficiency Management Plan (SEEMP). Many shipbuilders are now using environmentally friendly materials and technologies in the construction process. These products are fuel efficient and reduce greenhouse gas emissions.
3- Defense: shipbuilding is significant for defense and security. Aircraft carriers, submarines and destroyers are built to strengthen a nation’s military capabilities and protect its water borders.
Thus, the shipbuilding industry plays a key role in the global economy, affecting trade, defense and tourism. Its importance is manifested through the creation of new ships, maritime security and water tourism. The sector remains an important component of global infrastructure and economic development.
Changes in product demand caused by the varying speed of countries’ recovery from the pandemic have led to a sharp rise in the cost of shipping commodities and manufactured goods. Estimated billions of dollars in delivery delays amid geopolitical changes and ship shortages have emphasized the importance of shipping in global business. The maritime transportation market affects trade flows and goods exchanged between countries. The activities of carriers directly affect transportation costs and hence the volume of imports and exports. The high shipping costs faced by exporters weaken their competitive advantage in the global market. For example, recent problems with the Suez Canal blockage have emphasized the importance of major sea lanes for world trade. The closure of the Suez, Panama and Gibraltar canals has increased distances and delivery times, affecting the cost of transportation and trade turnover in general. As practice shows, such events can significantly reduce global trade, especially in the regions through which these key sea routes pass.
Orientation to the implementation of sustainable practices also plays an important role in the development of maritime trade. It is no secret that a substantial part of shipping contributes negatively to environmental pollution and climate change. Almost all ships use fuel based on fuel oil, which contains large amounts of sulfur. At the same time, there are only a few ports in the world with infrastructure for refueling with alternative energy sources. This situation forces companies to rethink logistics in order to access the necessary refueling stations, resulting in significant time, cost and market competitiveness. Most of the costs in such a situation are borne by consumers, who are forced to purchase necessary goods at higher prices – which has a deplorable impact on overall demand. Under public pressure and in pursuit of a more sustainable future, world organizations, including the International Maritime Organization (IMO), have taken it upon themselves to make a difference. Their goal has become to develop new shipbuilding technologies that promote safer products and more environmentally efficient operations.
With increased demand for freight transportation and the associated challenges, including delays and rising shipping costs, maritime shipping continues to play a key role in global trade. The need for efficient transportation of goods underscores the importance of port infrastructure and sea routes. However, the lack of infrastructure for alternative fuels significantly limits the industry’s growth potential. This calls for more intensive efforts in infrastructure and technology development to ensure the sustainability and efficiency of maritime transportation in the future.
Shipbuilding plays a key role in the global economy, providing transportation of cargo and passengers across oceans and seas. It facilitates international trade, creates a significant number of jobs and promotes economic development in regions with developed maritime infrastructure. Thanks to modern technologies and innovations, shipbuilding is becoming more efficient and environmentally sustainable, which has an impact on improving transportation conditions and reducing environmental impact.
However, shipbuilding also faces challenges, including climate change, stringent environmental requirements and changing market conditions. To successfully adapt to these, it is essential to invest in developing environmentally friendly technologies, improving vessel safety and increasing productivity. Continuous improvement in shipbuilding processes and technologies will help ensure a sustainable and prosperous global economy in the future.
Sources:
International Seaborne Trade and Exports of Goods, 1955-2021, The Geography of Transport Systems (https://transportgeography.org/contents/chapter5/maritime-transportation/international-seaborne-trade/)
Shipbuilding Market, straitsresearch.com, historical period 2018-2020, (https://straitsresearch.com/report/shipbuilding-market)
