Korea’s shipyards do better than the others, since they have a rather diversified portfolio of orders, with tankers, gas carriers, and container vessels taking equal share, and heftier backlog keeping them busy to around 80 percent of their capacity. Some credit goes to the active support of the state extended to the sector. Following them are the Chinese shipbuilders, focused primarily on bulk freighters, however their workload is far lower resting at 38 percent. Japan, while third in this race and loaded to 27 percent of its capacity, continues losing its market share. European shipbuilding is all in the construction of complex, thus very expensive vessels: their backlog is dominated by cruise ships, keeping its facilities loaded to 55 percent.
Prospects for improvement of the situation in the shipbuilding market are poor at best. Since 2016, there has been a permanent decline of the workload of major players in the market, but not in Europe, where shipbuilding has been showing stable growth since 2012.
In this complex market situation bare survival of the shipyards in the leading three countries is contingent on the growth of effectiveness of their operations. Experts estimate the degree of automation at Korean and Japanese shipyards at 70 percent while in China the indicator is just 25-30 percent. This accounts for the fact that labor intensity at Chinese shipyards is a third of that in Korea and Japan, which demonstrates benefits of integration of digital solutions in shipbuilding.
Experts also note that adoption of innovative solutions at shipyards produces a paradoxical effect, i.e. growth of effectiveness of a shipyard leads to higher capacity and, obviously, offer, which is already in abundance today.
Russia’s commercial shipbuilding includes 55 entities, provided the enterprises parented by corporations are considered as individual players. The Russian shipyards’ capacity provides around 310 thousand tons of steel processed per year.
The commercial shipbuilding market in Russia accounted for 30.6 bln. RUR in 2017 and 46.38 bln. RUR in the following year. It lacks stability, which is attributing not to its natural volatility, but rather to protracted construction periods of ships resulting in situations when several ships are commissioned in one year, thus affecting statistical indicators.
It is worth noting that the volume of import of ships, both new and used, surpasses the volume of shipbuilding for domestic needs 5-7 times in terms of costs in Russia.
All shipyards running their business in the Russian market fall under one of the three categories. About 80 percent of the overall production capacity in the sector and 60-80 percent of the Russian market in value terms belong to the state-owned United Shipbuilding Corp. Another group includes shipyards, based on internal waterways in European Russia. The others are enterprises established to build rigs and metal constructions. A special place belongs to the Zvezda Shipbuilding Complex, headquartered in Bolshoy Kamen, Primorsky region. As soon as its construction is finished, the shipyard has every chance to take the lead in both output (330 thousand tons of steel processed per year, construction of ships of unlimited displacement) and workload capacity. Finally, there are Crimean shipyards boasting the capability to build commercial ships from the keel. Among them are More and Ocean, affected by sanctions and enjoying a special attention of the Russian Government and state support.
All in all, a major market trends in Russian shipbuilding development is the growing role of the state as the leading customer and regulator in the area of creation and enhancement of the initial demand, as well as retooling of shipyards and establishment of new regional versatile shipbuilding groups on the basis of local facilities, e.g. Ak-Bars and Kalashnikov. Another important thing is that all indicators are in place to claim the transit from monopolistic to oligopolistic nature of the market. International sanctions are still a factor in the operation of USC, which is a detriment to a certain extent and leads to the growing footprint of import substitution. Also, the Russian market is isolated to a great degree from the world market of new ships. For one thing, it is a real challenge for Russian ships to squeeze into the world market of new ships, which has been at rock bottom for a decade. Thus, export in Russian shipbuilding is very low. Second, import of new ships to Russia faces several barriers: VAT and tariffs (minus RMRS registration fees), numerous localization laws and regulations, as well as geography. Besides, it is not in Russia’s plans to cease reequipping and retooling shipyards and plants, as well as diversifying production.