Better shipyard capacity key to building, refitting 3,500 green ships by 2050

Improving shipyard capacity will be crucial to enable thousands of green ships to join the global fleet in the next two and a half decades, a new report found.

It is estimated that over 3,500 ships must be built or refitted annually until 2050, yet the number of shipyards more than halved between 2007 and 2022.

Shipping contributes around 3% of global emissions caused by human activities and the industry is committed to tough targets to cut these. Reaching these targets will require a mix of strategies, including measures to improve energy efficiency, the adoption of alternative fuels, innovative ship design and methods of propulsion.

Decarbonization presents various challenges for an industry juggling new technologies alongside existing ways of working. For example, the industry will need to develop infrastructure to support vessels using alternative fuels, such as bunkering and maintenance, while at the same time phasing out fossil fuels. There are also potential safety issues with terminal operators and vessels’ crew handling alternative fuels that can be toxic or highly explosive.

The number of shipyards fell from about 700 in 2007 to about 300 by 2022 as a result of consolidation, according to UNCTAD’s Review of Maritime Transport 2023.

China, South Korea and Japan are responsible for constructing nearly the entire world deadweight capacity on order. Tighter environmental regulations, new ship energy-saving technologies, and the transition towards alternative fuels are driving reliance on a small group of builders in each vessel segment. At the same time, many yards are struggling to attract orders, according to UNCTAD.

“Increasing shipyard capacity will also be key as the demand for green ships accelerates. Such capacity is currently constrained with long waiting times and high building prices,” Justus Heinrich, Global Product Leader, Marine Hull, Allianz Commercial, pointed out.

“Capacity constraints on shipyards could have a knock-on effect for repairs and maintenance, with damaged vessels or those with machinery issues potentially facing long delays.”

Machinery damage or failure is the most frequent cause of shipping incidents, accounting for over half of these globally in 2023 (1,587).

With the decarbonization of the global shipping fleet remaining a major challenge in the long term, Allianz Safety and Shipping Review 2024 highlighted that 26 large ships were lost worldwide in 2023, down by one third year-on-year, the industry’s lowest ever total. South Asia emerged as the global loss hotspot, both over the past year and decade.