As the replacement cycle driven by aging ships worldwide arrives, a forecast said 46,000 newbuild vessels will be ordered over the next 15 years. With the global order backlog for ships now exceeding four years based on current production capacity, analysts say the global shipbuilding industry is entering a phase of large-scale demand expansion, with orders expected to peak in the mid-2030s.
For now, Chinese shipyards, leveraging price competitiveness, are absorbing orders in the market. China swept up 80% of the new ships ordered by global shipowners last month. While Korean shipbuilders, which are selectively focusing on high value-added vessels, have secured stable workloads through the early to mid-2029 period, China's pursuit is spilling over into the liquefied natural gas (LNG) carrier market where Korea has held an advantage, threatening market leadership.
◇ Replacement cycle for aging ships arrives… China moves to expand docks
According to Arrow Shipbroking Group, a global ship brokerage, on the 23rd, the global newbuild ordering cycle will only reach its peak in the mid-2030s, with 46,000 vessels expected to be newly built over 15 years. Ships delivered in large numbers during the 2009–2012 shipbuilding boom have entered their replacement window, and growing geopolitical turmoil is accelerating the reconfiguration of logistics networks, prompting more shipowners to bring forward newbuild orders.
By vessel type, small liquefied petroleum gas (LPG) carriers, small and midsize container ships, and large LNG carriers are already in short supply, and replacement demand is rising for large bulkers and tankers. In addition, seaborne trade volume is expected to increase 10% by 2030, which will lift vessel demand.
China is expanding production capacity to meet this demand. China's annual building capacity, which was around 20 million CGT in 2024, is expected to grow to 35 million CGT by 2028. That is close to the current global shipbuilding capacity of 40.5 million CGT. By contrast, Korea, with expected output of 11.17 million CGT this year, remains cautious about large facility expansions due to the aftereffects of restructuring from a prolonged downturn and labor shortages.
Chinese shipbuilders began restarting yards that had halted operations during the 2012 shipbuilding slump about two to three years ago. From this year and over the next three years, they are expected to further boost capacity by focusing on securing new docks and building new yards.
China is drawing in global newbuild orders on the back of labor and expense advantages. Of the 5.21 million CGT in global orders in February, China won 4.15 million CGT (80%), more than seven times Korea's 570,000 CGT (11%). As of last month, China's share was 62% of the global backlog of 183.56 million CGT, far above Korea's 20%.
China's concentration is also clear in the crude tanker market, where demand has surged this year. Of the 91 crude tankers ordered worldwide in January–February, Chinese shipyards won 69 (75%).
◇ China's multi-pronged offensive in the high value-added LNG carrier market
Major Korean shipbuilders are defending profitability with high value-added vessels such as LNG carriers, but even this market is seeing intensifying pressure from China. In January, Jiangnan Shipyard in China won orders for two 175,000-cubic-meter LNG carriers from East Pacific Shipping (EPS) of Singapore, and Hudong–Zhonghua Shipbuilding won six 174,000-cubic-meter vessels from TMS Cardiff Gas of Greece. TMS Cardiff Gas had been a regular customer of Korean yards for LNG carriers but turned to China for the first time, and EPS also chose China for its first LNG carrier order.
Chinese shipyards are targeting the market by offering large LNG carriers at prices about 10% lower than Korea's. Delivery issues, long seen as a weakness for Chinese yards, are also improving. Hudong–Zhonghua Shipbuilding is said to have shortened LNG carrier construction time from 36 months to 16 months by localizing key equipment.
An industry official said, "China is not only offering lower prices but also providing financial support such as loans, making it difficult for Korea to compete on technology alone," adding, "If we do not maintain an overwhelming technological lead in key ship types such as LNG carriers while diversifying our lineup to strengthen order competitiveness, there is growing concern on the ground that China could seize the initiative."