A green coat of paint for China’s shipbuilding industry

The International Maritime Organization has set a goal for net-zero emissions in the shipping industry by 2050. China, being a major shipbuilding nation, is striving to show encouraging and numerous signs of progress towards this objective.

Chinese shipyards have cleverly positioned themselves to accommodate increasing demand for dual-fuel or alternative-fuel vessels moving forward, as other main segments, such as dry bulk and tankers, join containerships in the adoption of these propulsion systems. Statistics from the China Association of National Shipbuilding Industry show that from January to October last year, over 45% of the new shipbuilding orders received by China were for green ships. And this percentage continues to increase.

Currently, Chinese yards are ascending to dominance in earning orders for dual-fuel newbuilding ships, securing a pole position for future greener tonnage. In gross tonnage terms, the country’s building activity has grown to 55.8% of global contracts for dual-fuel vessels over 2023 until mid-December and is followed by South Korea with 36.5% market share. China has won more than 5% of the dual-fuel market share compared to 2022 (50.4% of global contracts), while South Korea has lost 8.5% of dual-fuel market share compared to 2022 (almost 45% of global contracts). China and South Korea are followed far behind by Japan with 3.8 % and 6% of global dual-fuel share in 2022 and 2023 respectively.

China’s shipyards benefit from relatively abundant human resources and investments in comparison with their foreign rivals and propose flexibility in design, enabling owners to make customized modifications. This reflects China’s commanding cost advantage, especially regarding labour, although domestic shipbuilding workers are becoming scarce. Yards in Japan and South Korea provide relatively fewer tailor-made features, partly because such changes are far more expensive for them. Moreover, global demand surges for offshore wind installation vessels, with Chinese shipyards taking on nearly 90% of manufacturing. According to the China Association of the National Shipbuilding Industry, as of October 2023, global orders for offshore wind installation vessels stood at 37 units, with Chinese shipyards manufacturing 33 of them. In the first three quarters, 20 offshore wind installation vessels were delivered, setting a new historical record.