EU shipbuilding is a dynamic and essential competitive industry, both commercially and socially. It counts approximately 300 shipyards where civilian and naval ships as well as platforms and other hardware for maritime applications, are crafted. In 2021, around 2.7% of global ships were built in the EU, up from 2.3% in 2020. Other sectors, such as transportation, security, energy, research, and the environment, are all involved in shipbuilding. Shipbuilding is a major and critical business in many EU countries, and is vital to regional industrial infrastructure and national security.
The EU is the top producer of cruise ships in the world and one of the leading players in high-tech, complex vessel types. Overall, the EU industry received fewer shipbuilding orders than China, South Korea and Japan in 2021.
Due to continuous investments in research and innovation, the EU is also the largest supplier of marine equipment, such as diesel engines, turbines, propellers, and blades, followed by Korea, China, and Japan . Only in the marine diesel engine market, did the EU reach EUR 11.7 billion net exports between 2019 and 2020.
The sector generated a GVA of EUR 14.5 billion in 2020, in decline by 8% compared to the 2019 peak. Gross profit, at EUR 3.1 billion, decreased by 10% on the previous year. The profit margin was estimated at 6%, stable compared to 2019. The turnover reported for 2020 was EUR 55.7 billion, recording a 4% decrease on the previous year.
The shipbuilding and repair sector includes the following sub-sectors and activities:
- Shipbuilding: building of floating structures; building of pleasure and sporting boats; repair and maintenance of ships and boats;
- Equipment and machinery: manufacture of cordage, rope, twine and netting;manufacture of textiles other than apparel; manufacture of sport goods; manufacture of engines and turbines, and manufacture of instruments for measuring, testing, and navigation.
About 9% of the persons employed in the EU Blue Economy perform activities within Shipbuilding and repair, and the contribution of the sector to the GVA of the overall EU Blue Economy is about 11%. These values demonstrate the primary role of Shipbuilding and repair within the EU Blue Economy. About 81% of the sector’s GVA comes from Shipbuilding, whilst equipment and machinery produced the remaining 19%.
Germany leads employment within shipbuilding and repair, contributing with 16% of the jobs, followed by France (15%) and Italy (14%). In terms of GVA, Germany records 22% of the Members States’ GVA, followed by France (20%) and Italy (17%).
In 2020, around 305 500 persons were directly employed in the sector (2% increase on 2019). Of these, shipbuilding accounted for 85% of jobs, whilst the remaining were within activities related to equipment and machinery. Total wages and salaries amounted to EUR 12.1 billion, in line with the previous year, and the annual average wage was estimated at EUR 39 000, down 3% on year-to-year.
In addition to macroeconomic shocks, such as the COVID-19 pandemic and Russia’s unprovoked invasion of Ukraine, several factors affect the shipbuilding and repair sector. The industry is shifting towards eco-friendly vessels to mitigate climate change in line with the EC directives; digitalisation is also expected to accelerate the entry to market of autonomous vessels. Decarbonisation and digitalisation may change maritime business models and industries.
The major driver for the global industry is represented by seaborne trade. Although the first part of 2020 saw reduced trade volumes, the global shipbuilding industry operated without major impediments. However, the business model of the EU shipbuilding industry, focused mainly on the manufacture of passenger ships, such as cruise ships, ferries, and yachts, and led to severe setbacks during the COVID-19 pandemic. According to the Cruise Lines International Association (CLIA), the passenger volume in Europe declined overall by 82.5% in 2020, and in some regions, the passenger volume completely halted (i.e. Baltics). As a consequence, cruise lines recorded heavy losses due to inactivity and were forced to cancel orders for new ships.
The growth of the global economy is an important driver for the industry. General concerns over the global economic outlook are reflected over the new ship demand. According to the OECD’s forecast, 336 million GT are expected to be built over the period 2021-2030, 60% of which will be bulkers, and 20% tankers, with the remaining being container ships and general cargos. This can be partially explained by the war in Ukraine, which has affected the price of materials needed to build ships. In particular, steel prices in Europe were almost four times higher in April 2022 than in June 2020. This led to an increased production cost that affected the industry.
One major consideration for the industry is the green transition. Environmental regulations play a fundamental role in the evolution of this industry. To reduce the carbon intensity of all ships by 40% by 2030 compared to 2008 baselines, the Marine Environment Protection Committee set several directives that directly affect the shipbuilding and repair sector.
Under the MARPOL Annex VI treaty, in addition to the Energy Efficiency Design Index (EEDI) that regulates efficient shipbuilding, two mandatory measures have been outlined. First, the Energy Efficiency Existing Ship Index (EEXI), for ships above 400 GT, EEXI indicates the energy efficiency compared to a baseline. The calculated attained index must be below the required EEXI to guarantee minimum energy efficiency standards. Furthermore, the Carbon Intensity Indicator (CII), for ships above 5,000 GT determines the annual reduction factor needed to continuously improve a ship's operational carbon intensity within a specific rating level. Both measures became mandatory on the 1 January 2023. The International Maritime Organization’s (IMO) Marine Environment Protection Committee (MPEC) has the duty to review the effectiveness of the implementation of the EEXI and of the CII to develop further amendments where necessary by 1 January 2026, at the latest.
To reach a low-carbon shipping industry, the IMO highlights the importance of low- and zero-carbon fuels. The push for alternative fuels in the maritime sector leads to an increase in the production of marine equipment. Most of the orders in the EU include battery (combination of pure electric, plug-in and hybrid) and LNG fuel capable engine. However, a recent increased focus on alternative fuels has contributed to decarbonisation such, as methanol, hydrogen, and ammonia.
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The shipbuilding industry impacts various policy areas, mainly research and innovation, intellectual property, maritime clusters, safety, and the environment. In particular, it provides the assets, capabilities, technologies, and know-how for several Blue Economy activities such as the Primary sector (capture fisheries and offshore aquaculture), Maritime transport, Non- living resources, Marine renewable energy, Coastal tourism (transport), and Maritime defence and security. The EU Shipbuilding and equipment sectors are driving new opportunities, especially when working alongside growing and emerging sectors. These include: assistance vessels and structures for offshore wind farms, and other ocean technologies, and deep-sea exploration and exploitation.
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