Shipyard’s lack of capacity could prove a main obstacle in shipping’s drive for decarbonization. In its latest weekly report, shipbroker Intermodal said that “shipyards play a critical role in steering the maritime industry toward sustainability, overseeing everything from innovative ship design to responsible recycling at end-of-life. These entities are not just builders but pioneers in facilitating maritime decarbonization. On the other hand, current shipyard capabilities are stretched thin, leading to long queues and escalating construction costs. Since the financial downturn, there’s been a significant contraction in global shipyard capacities. While consolidation has narrowed down the number of active shipyards from around 700 in 2007 to approximately 300 in 2023, the industry is now tasked with constructing or retrofitting over 3,500 ships each year until 2050, a feat not seen since 2010 when 2,700 vessels were built annually (UNCTAD)”.
According to Ms. Chara Georgousi, “furthermore, the majority of global shipbuilding capabilities are concentrated in a few key groups in China, South Korea, and Japan. Environmental guidelines, energy-saving innovations, and the shift to alternative fuels increase dependence on a select set of builders. As a result, smaller shipyards face difficulties in securing orders due to shifts in ordering patterns, placing additional stress on larger yards that have been fully booked for years. Operational challenges abound, including technological limitations and high upfront costs for sustainability. Economic volatility and supply chain issues add another layer of complexity. Shipyards must also upgrade infrastructure to accommodate green technologies and forge strategic partnerships for broader advances”.
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“As we approach 2024, uncertainty in global fleet trends persists. Lower levels of the global ship order book could limit fleet growth, especially as existing ships age and slow down to meet IMO standards. This scenario exacerbates concerns about a shortfall in shipping capacity, especially given the limited capabilities of major shipbuilding yards. Against this backdrop of doubt and uncertainty, however, it’s crucial to spotlight the remarkable progress spearheaded by Korean shipyards. Not only have they navigated these challenges, but they’ve also seized them as avenues for innovation and leadership. This leadership is particularly evident in their commitment to alternative fuel technologies; an impressive 76% of their order book is dedicated to alternative-fueled ships. This innovation rate substantially outpaces their nearest competitors, with Chinese and Japanese shipyards lagging at 32% and 14% respectively”, Georgousi said.
“In tandem with these endeavors, the Korean government has worked to establish a comprehensive strategic roadmap for the maritime industry, encapsulated in the 2023 Action Plan from the Ministry of Ocean and Fisheries. This master plan emphasizes the crucial contribution Korean shipyards are set to make in steering the industry toward sustainable practices. Korean shipyards are pioneering sustainable maritime technologies, particularly in the development of Zero-Emission Vessels (ZEVs) using hydrogen fuel cells and ammonia propulsion. They are also innovating in dual-fuel technologies and energy-efficient ship designs, offering both standard and customized solutions. In collaboration with the government, they’re improving infrastructure, including green fuel supply chains and specialized refueling stations. These initiatives not only aim to reduce the shipping industry’s carbon footprint but also position Korea as a global leader in the emerging market for sustainable ships.”, Intermodal’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide