Demand for the global operational shipping fleet is expected to decline 1.37 percent in 2010 and 2.3 percent in 2011 due to cancellations of new ships, said international research service, Frost & Sullivan.
Kumud R Jha, Consultant at Frost & Sullivan Transportation & Logistics Practice, Asia Pacific, said that the average age of the world fleet would increase due to the decline in the number of new ships.
New analysis from Frost & Sullivan, Asia Pacific Commercial Shipbuilding Market, found that the market earned revenues of US$44 billion in 2008 and estimated this to reach US$52 billion in 2014.
Mr Jha advised new entrants into the shipbuilding industry to focus on the ship repair segment, as the capital requirement is smaller which will ensure adequate cash flow and sustainability.
"Ships incur operational and repair costs on a regular basis, irrespective of whether they are operational or not," Mr Jha said, adding that this acted as a constant source of income and ship repair companies were less affected during economic slowdown.
He added that shipyards must also undertake a realistic assessment of their throughput capacity and restructure themselves to better utilise and optimise their processes.
Mr Jha noted that Vietnam and India have been the emerging markets for ship repairs. "With low labour cost, government support, and high traffic density, Vietnam and India have the potential to become major shipbuilding countries," he said.
South Korea, China and Japan were the three biggest shipbuilding countries in the world. South Korea was the leader in the shipbuilding industry in 2008 with more than 138 million tonnes in its order book. The country's continued success in this industry is attributed to the use of latest technology and shipyards with the highest capacity.
China's shipbuilding market share increased to 33.4 percent in 2008 from 29.6 percent in 2007 primarily due to cheaper production costs. Japan's shipbuilding market share was at 17.3 percent in 2008.
Meanwhile, Europe has a 4.7 percent market share in the global shipbuilding market and its orders are mainly for cruise ships. However, Europe has seen its market share declining over the years due to competition from Asian shipbuilders.
Mr Jha also said that many big shipping lines are currently favouring green ships due to increasing stringent regulation and rising awareness for the environment. "Greenfield yards are also being built to reduce the carbon spent on building new ships," he added.
