REVIEW OF LITERATURE

Shipbuilding (encompassing shipyards, the marine equipment manufacturers and a large number
of service and knowledge providers) is an important and strategic industry in a number of
countries around the world. This importance stems from the fact a nation's need to manufacture
and repair its own Navy and vessels that support its primary industries.
This paper presents a brief overview of the shipbuilding industry in India and the possible
challenges and opportunities that Indian companies could enjoy in the future.

Shipyard Industry includes following-

 Ship Building
 Ship Breaking
 Ship Repair

Ship Building
Global Shipbuilding is estimated to be a USD 20 billion industry and is presently dominated by
Korea, Japan and China, which together account for around 75 per cent of the world output.

Fortunes of shipping and shipbuilding industries seem to be linked to each other or at least move
in tandem. For nearly three decades in the post World War II era, both the industries were
dominated by European nations and United States. However, high labour costs in the yards of
Europe and USA, one of the major determinants in this cost competitive industry, has led to a
gradual shift of the center of shipbuilding to these Asian nations over the last two decades.

Similar progress was observed in Indian shipbuilding industry, as per the research carried out
by i-maritime Consultancy the order book of the Indian shipyards, which was hovering around
Rs 1,500 crore in 2002, has reached a value close to Rs 13,700 crore by September 2006, with
nine times increase in just four years. The Indian shipbuilding, which was totally domestic till
late 90’s has become export oriented. ABG Shipyard was the first to build and export a
newsprint carrier for a Norwegian client in 2000 and established India’s competitiveness in
building and delivering ships of the international standards. Today six years down, out of the 199
ships on the orderbook, close to 124 are for exports.

India has a long history and tradition of shipbuilding that can be traced back to the Harappan
civilisation. However, since the beginning of the 20th century, it had been on a declining scale
and presently, rated capacity of country's shipbuilding yards is minuscule vis-à-vis world's
capacity.

Indian shipyards remain largely insulated from the present boom in shipping and shipbuilding.
Hindustan Shipyard Limited and Cochin Shipyard Limited, two of the country's largest
shipyards, have got only one order each - a Handymax and an Aframax vessels respectively.
Both their orders are from Shipping Corporation of India, a public sector unit and many market
participants believe that the above is not a result of economic consideration.
However, Indian shipowners have gone forward and placed sizeably large orders with foreign
shipyards. SCI has placed order for 4 Aframax with Hyundai Shipyard, which is due for delivery
in 2003. Great Eastern Shipping has placed order for 2 Aframax vessels, one each with Samho
Shipyard and Samsung Shipyard and is also planning to place an order for one more Aframax
with a foreign shipyard. The lack of commitment, cost overruns, poor quality constructions,
delayed delivery, etc. has debarred the Indian shipyards from getting a significant volume of
orders.

However, some private sector yards are showing increasingly better performance. ABG
Shipyards, one of the leading private sector shipyards of the country, has recently executed an
order of newsprint carriers for Norway-based Lys Lines and got another order of delivering five
10,000-dwt dry cargo vessels from a German shipowner. Both Norwegians and Germans are
known to demand the best of quality products.

Looking at the prospects of Indian shipbuilding industry, it has been observed that cost
competitiveness remains the significant advantage of domestic shipbuilding industry considering
the two major parameters of shipbuilding viz. steel fabrication and labor. China is emerging as a
major shipbuilding nation leveraging on these advantages and posing serious threats to Korea
and Japan. Considering this, it can be said that a proper strategy taken in the right direction could
leverage the competitive benefit and lead the Indian shipbuilding industry towards better
prospects.

Ship Breaking
Ship breaking or ship demolition involves breaking up of aged ships for scrap.

Ships purchased on the basis of their light displacement tonnage (LDT) are demolished in ship
breaking yards and sent to steel re-rolling mills for reuse as raw material for production of steel.
Currently, the international ship demolition market is centered around the Indian subcontinent.
While a large number of tankers find their way to scrap yards in Pakistan and Bangladesh, Indian
ship breaking yards attract mostly dry and general cargo vessels.

Ship breaking industry in India is mostly concentrated at Alang in Gujarat, which is the
world's largest ship breaking yard catering to nearly 90 per cent of India's ship breaking activity.
However, sporadic activity also takes place in other locations like Sachana, Gujarat, Mumbai and
Calcutta. The ship breaking activity at Alang includes a total of 170 yards of which 50-70 are
operational and around 50,000 people are involved directly or indirectly in the business of
scrapping. The total tonnage of ships broken in India has varied from a low of 0.65 million ldt in
1991-92 to a high of 2.79 million ldt in 1997-98. Financing is an important aspect of the industry
as scrapping normally involves an intermediary 'cash buyer'. Earlier State Bank of Saurashtra
and Dena Bank took active role in the ship breaking industry, however, of late, most banks have
become reluctant to finance ship scrapping projects.
Ship scrapping industry in India suffers from government apathy. In spite of the fact that re-
rolling accounts for about 60 per cent of the national production of bars, rods and structural and
ship scrapping supplies nearly 200,000 tons of scrap every year to the re-rolling mills, the sector
remains largely disorganized as well as unrecognized.

In the recent past, the ship scrapping industry attracted considerable attention on the issues
relating to environmental pollution, health problems of labour and violence of human rights.
Environmentalists across the world particularly Greenpeace and Basel Action Network have
drawn international attention to the poor working environment prevailing at the Indian ship
scrapping yards particularly at Alang and opened up fronts everywhere by calling for legal action
against scrappers, building up public opinion against scrapping and physically blocking the ships
meant for scrapping. The environmental issue could become the single largest factor that could
determine the structure of the ship breaking industry in future.

Looking at the prospects of the ship breaking industry in India it has been observed that
competition from neighboring countries is expected to become tough in the near future. China
has also come back to the scrapping industry in recent years with a bang by capturing a
significant volume of tonnage sent for scrapping. Pakistan and Bangladesh are likely to pose
serious threat to Indian ship scrapping yards. Considering all the hurdles faced by the Indian ship
scrapping industry, ample scope for improvement has remained and Indian ship scrapping
industry is expected to take all possible actions to keep the industry vibrant.

Ship Repair
Ship repairing is a service, consisting of a number of smaller services on various parts and
components of the ship. While the repairing activity is adjunct to shipyards and ports, the extent
and complexity of these services vary.

Ship repairing in India started long back. The first dry dock was built at Bombay port in 1750
and second at Calcutta port in 1781. For about two decades immediately after the Independence,
the Indian ship repair industry made a booming business. The potential size of the ship repair
industry in India is around Rs. 44 billion, which includes repairing required by Indian and
foreign vessels calling at Indian ports. However, only a small percentage of this business
equivalent to Rs 10-12 billion is executed by the Indian ship repairing industry.

In India, major shipyards carry out both ship repair and ship building activities. The industry is
controlled by 10 large and 30 to 40 medium and small sized shipyards apart from Naval Dock
yards and Defense shipyards. The attempts to set up exclusive ship repair facilities in the
private sector failed to perform.

With the growing fear of pollution and stricter norms and regulations, ship repairing services are
in demand. Indian shipyards have the competitive advantage like low labor costs, availability of
trained and skilled labor force and proximity to international shipping routes required for getting
success in the business. However, the industry is in a dismal state, not withstanding such
advantages and has not been able to cater to the needs of the Indian merchant fleet adequately
due to following reasons.

 Lack of new investments in machinery / equipment

 Deterioration of existing machinery / equipment
 Usage of obsolete methods and systems
 Lack of suitable training for upgradation of skills
 Life emphasis on professional management techniques
 Supply bottlenecks for raw materials and spares
 Over dependence on public sector
 Cumbersome government procedures
 Extremely low labor productivity

While there has been success in the field of ship breaking and ship building industry in India
both of which are labour intensive, ship repairing industry can also replicate the scenario
provided it utilises its inherent competitive advantages to the maximum

The Uniqueness of Shipbuilding sector:

§ The shipbuilding industry has its own distinctive feature as compared to other industries
in the country. It is unique in a way that it has to sell first and construct later, unlike the
auto industry or others, where one manufactures first and sells later.

§ Further shipyards get orders only if they are credible (deliver quality ships on time) and
it can be credible only after successfully executing consistently under international
competition.

§ Further, subjoined, it has to be globally competitive against the best yards in the world.
Unfortunately, the shipyards are faced with very stiff taxes, tariff, duties, and financing
charges as compared to foreign yards.

§ The deliverables of the sector involves long gestation periods and requires high cost
finances over a long period.

Global Scenario:

Globally shipbuilding is a USD 20 billion industry. The global shipbuilidng order book
recorded a 29% CAGR over the period of 2003 – 06. An upward trend has been
witnessed in the world order book as a percentage of worldfleet indicating a strong
demand outlook.

Fortunes of shipping and shipbuilding industries seem to be linked to each other or at

least move in tandem. For nearly three decades in the post World War II era, both the
industries were dominated by European nations and United States. Historically,
shipbuilding industry suffered from the absence of global rules and a tendency of over-
investment due to the fact that shipyards offer a wide range of technologies, employ a
significant number of workers and generate foreign currency income (as the shipbuilding
market is dollar-based and a global one).

However, high labour costs in the yards of Europe and USA, one of the major
determinants in this cost competitive industry, has led to a gradual shift of the center of
shipbuilding to these Asian nations over the last two decades.

Today shipbuilding has become an attractive industry for developing nations. Japan used
shipbuilding in the 1950s and 1960s to rebuild its industrial structure, Korea made
shipbuilding a strategic industry in the 1970s and China is now in the process to repeat
these models with large state-supported investments in this industry.

The tidal shift in shipbuilding activities, from Europe to Asia, has opened up huge
opportunities for Indian yards, and both public and private ship-builders are capitalizing
on them

Indian Scenario:

With global shipping industry pitching for an unprecedented demand for new
shipbuilding , a
window of opportunity which was not available earlier, has been created for the Indian
shipbuilding industry.

The Indian shipbuilding industry had always been dogged by low capacity, poor
productivity and lack of modernisation. Thanks to the gradual shift of shipbuilding from
Europe to Asia, today contrary to expectations the Indian Shipbuilidng order books stand
at 1.3 million DWT. This has been possible on account of the shipbuilding boom and
both foreign/Indian Shipping Companies are coming forward to place new building
orders on Indian Yards. This has enabled the industry’s order books to grow from Rs
1500 crs in 2002 to Rs 14,000 crs (roughly 3060 m $) in 2006

The Indian shipbuilding industry is on a high growth trajectory and is expected to grow at
a compounded growth of 30%. Though India has not yet become a significant player in
the global shipbuilding business, it has gained a strong foothold in the niche offshore
segment.

India’s share in the world market has gone from an insignificant low of 0.1% in the
beginning of 10th Plan to 1.3% in 2006. Hence from an an inward looking industry
dependent on government orders, the Indian shipbuilding industry is emerging as
internationally competitive export led industry.

Nevertheless, the industry is still in its nascent stage and dependent on government
support for subsidy. The industry is expected to become self sufficient in 10 years time
and will no longer require subsidy thereafter. It is clear from the above that India can
grow in the shipbuilding sector
in a healthy manner if shipbuilding is recognized as a strategic industry and if it can enjoy
simple taxation policies with a fully empowered regulating body for quick decision-
making .

Tracking India’s performance:

India has 23 shipyards, of which 7 are under administrative control of the central
government, 2 with state governments, and the rest in the private sector.

The current shipbuilding capacity of India is only 2,81,000 DWT, which is quite
undersized according to global shipbuilding standards, and inadequate given the country's
requirements. A comparison of productivity shows that while China may be well ahead of
India in total ship building, it’s productivity is almost the same as India and this is one
area that India can take a lead on the strength of its IT industry and setting up new
modern shipyards.

Country Completions M DWT Employees Productivity DWT Person

Japan (2004) 23.2 80,000 290
Korea (2004) 23 71,800 320
China (2004) 8.8 158,000 56
India (2006) 0.6 12,000 50

Comparing India and China:

A comparison of productivity between India and china shows that while China may be
well ahead of India in total ship building, it’s productivity is almost the same as India and
this is one area that India can take a lead on the strength of its IT industry and setting up
new modern shipyards.

China India
Shipbuilding & Repair Yards 492 28
Manufacture of Equipment 148 Not Known
No of Employees 2,87,702 (total industry) 12,000
Orderbook 40 m DWT 1.3m DWT
Global share 19 - 20% 1%

China has been gaining almost 2% of the world’s share every year. India has a lot of
catching up to do.

The growth of Chinese shipbuilding industry is now becoming a threat to almost all
major shipbuilding nations as China is planning to become the leading shipbuilding
nation with an aim to corner more than 30% global share by 2015. India is probably the
only country that will be able to match the Chinese prices with its relatively low labour
costs and industrial base for manufacture of equipment.
The fact however remains that India’s contribution is tending towards being a significant
component in the global shipbuilding industry and that we need to get our act together to
use this very promising window of opportunity. With the exponential growth in the
number of ships calling on Indian ports, providing ship-repair facilities is becoming an
increasingly attractive opportunity. Not only does ship-repair and building activity help
generate substantial local jobs, it also builds the capacity of local industry.

Stakeholders in Indian Shipbuilding sector:

Government:
§ FDI: the government has permitted 100% FDI in shipbuilding and ship repair activity

§ Investments: the government has proposed to invest INR 71.95 billion in the
shipbuilding industry, towards the modernization of infrastructure and development of a
research design base

§ XI plan outlay:
Name of shipyards/schemes Government Budgetary Support (INR million) Internal and
External Budgetary Support Total
Cochin Shipyards 400 5,500 5900
Setting up of two International size Shipyards 15,000 15,000 30,000
R&D schemes in Shipbuilding 2,018 NA 2,018
Conducing Studies 190 NA 190
Total 20,608 23,520 44,128

Private Players:
Indian corporates and shipyards plan to invest over 170 billion INR over the next 5-7
years that has the potential to take india’s share to over 3% to 5% of global shipbuilding.
Indian business is convinced that India has a major comparative advantage in ship-
building that has been masked all these years by an inefficient public sector notorious for
high costs and time overruns. The labour cost per worker in India is estimated at $1,192
per year, against $10,743 and $21,317 per worker in leading shipbuilding countries like
South Korea and Singapore. Apart from skilled welders and fitters, India has world-class
naval engineers and architects. These, along with top-class management,
can make India a global power.

Key issues and challenges:

The Indian Government has been trying various promotional and subsidy measures since
the 70’s which managed to keep the industry alive at a time when the global industry was
passing through a deep recession after the boom of the 70’s which, the country missed
due to lack of industrial growth.

The shipbuilding industry is now witnessing a growth phase after a gap of almost 25
years. This is an opportunity for India to revive its shipping industry and bring it at par
with the rest of the world.
It is essential for India to put together strategies, which could lead to optimal and
effective contribution towards the global shipbuilding industry. Infact the time is just ripe
for India to carve a niche in this sector. However in order to achieve this objective, it
would be imperative to address concern areas which could be detrimental to the future
progress of the sector:

Procedure governing subsidy support: with Indian shipyards suffering systemic and
scale disadvantages, the policy of GOI to extend subsidy support to Indian shipbuilders
enabled them to effectively compete in the global market. However, after expiry of the
subsidy scheme, even as its renewal is under construction, there is a need to ensure that
that prescriptive procedures governing eligibility to receive subsidy are removed. These
include necessity to win an order through international bidding or certification from the
ship owner that the bid process had been followed before selecting the Indian shipyard,
which effectively ensure that the benefits of the subsidy scheme are not realized by the
private ship-owners as most of their ship building orders are through negotiations

Deficient infrastructure: Indian yards lack the capability to build large and modern
ships. Presently, the Cochin shipyard is the only one that has the capability to build large
and modern ships. While the government has provided subsidies to shipyards but it has to
ensure that the benefits reach the private players as well

Disadvantages accruing from small scale of operations: the shipbuilding sector in

China and South Korea have received government fiscal and policy support, enabling
them to develop scale as well as a cluster of ancillaries. These advantages of scale are not
available to Indian shipbuilding industry, which imports most of its input materials and is
therefore unable to leverage advantages offered by bulk purchases and Just in Time
supplies. As a result there is significant cost disadvantages on account of import
dependence which eat into low labor cost advantages of Indian shipbuilders.

Lack of ship design and limited investment in R&D: Indian players need to work hard
to meet the international players in ship automation and technology

Benchmarking it to international standards: The Indian shipbuilders must focus on

benchmarking their own processes to international standards to improve the efficiency,
delivery time, price and quality, which will in turn, will enhance the competitiveness of
the shipbuilding sector. Measures such as performance incentives, PPP models, etc could
be introduced to improve efficiency.

Supporting the growth of ancillary industries: Ancillaries need to develop along with
the shipbuilding industry as they are the key competitive differentiator for
establishing/relocating shipbuilding and shiprepair facilities. A cluster development
approach for building ancillary capacity could be adopted.

Training and human skills issues: Development of training programs in various

academies to produce high quality talent should be prime focus

No tariff protection from imports

Multiple clearances: As the industry Is dynamic and cyclical in nature these clearances
result in procedural delays and hampers augmentation of capacity

(a) Presently there is no supervisory Authority/Apex body

(b) High customs and excise Duty on capital investment: The government levies 35%
duty on all capital equipments such as cranes, plasma cutting machines, and other
material handling equipment purchased for running a shipyard

(c) Duty on sale of ships to Indian Shipping Companies: The materials and parts imported
for building ships are exempted from payment of custom duties but these ships once built
are treated as imported ships and a custom duty of 5.0% is levied on them

(d) Onerous Tax Structure: Indian shipyards are subject to 19 different taxes/ duties.
These taxes cumulatively put Indian shipyards at a disadvantage and diminish their cost
competitive as compared to the international players

Growth Enablers:

The growth in overall trade, increase in offshore drilling activity, and demand from the
naval force and coastal guards are the key growth drivers for the Indian shipbuilding
industry.

Leveraging labor cost advantage: In India, labor cost per worker per year of USD 1,192 is
very low, when compared with USD 10,743 and USD 21,317 in South Korea and
Singapore respectively

Offshore segment: As the proven oil and gas reserves are likely to meet the global energy
requirements only till 2030, there is increased exploration and production (E&P) activity,
particularly in the offshore segment. This is expected to drive the demand for OSVs.

Indian shipyards have carved a niche in the construction of OSVs. Approximately 70.0 %
of Bharti’s and ABG’s order book is directed towards the oil and gas sector. Globally
India has one of the largest OSV order books. Industry leaders, Korea and Japan have
limited OSV capacity, resulting in a shift towards India

Replacement Demand:
40% of the Indian owned fleet is more than 20 years old and Indian owners will need to
spend about $ 4 billion to replace these in the next 5 years.
The International Maritime Organization (IMO) has mandated the phasing out of all
 single hull vessels by 2010. Single hull tankers constitute 15.8% of the total vessels

Worldwide the shipyards are full and the world is turning to India to meet its
requirements. After all, China and India have the skills and cheap steel to make the best
and cheapest ships.

The successful shipbuilding industrial development of Japan, Korea and China has not
happened by chance but by a carefully crafted policy where the government has provided
the core administrative guidance and support. Such an integrated policy initiative would
be required for the revitalisation of the Indian ship repair industry as well so that
conditions are created for the Indian firms to become technological leaders instead of
followers, through promoting competition, cooperation and even acquisition and Joint
Ventures with leading foreign yards.

Trends in global shipbuilding

“The future will be determined in part by happenings that it is impossible to foresee.

It will also be influenced by trends that are now existent and observable”
(Emily Greene Balch)

Shipbuilding : An important economic activity

The global shipbuilding industry was estimated to value an astounding US$100 billion,
according to a Bloomberg report dated December 2006.

This should not come as a surprise considering that an estimated 80 percent of the world’s trade
(by volume) is carried in whole or in part by seaborne transport (UNCTAD, 2009).

In addition, vessels of all kinds ply the world’s waterways to undertake and facilitate a stunning
array of activities. These include the transportation of cargos, dredging, search and rescue,
environmental clean-up, oil and gas exploration and production, cable and pipe-laying, scientific
research, fisheries, project construction, tourism, naval warfare and patrols, among many others.

Shipbuilding is a crucial activity that provides equilibrium between the demand and supply in the
merchant shipping sector. When demand for a particular type of cargo is high, the demand for
the ship carrying that cargo will rise in correspondence. Owners and operators of vessels in that
trade will place orders at shipyards specialising in building that type of ship, and shipyards will
crank up production to build those ships.
Given the demand-derived nature of shipping, it can be said that it presents a fair representation
of the state of health of the global economy and trade.

On the same account, the shipbuilding industry also provides a similarly reliable testimony to the
global economic and trade performance. There is indeed a strong and direct correlation between
the performance of shipbuilding and the global economy and trade. Shipbuilding activities rise
when global trade and economy grow. Likewise, shipbuilding will be among the first activities to
suffer when trade slumps and the economy stutters. This puts shipbuilding at the forefront of one
of the world’s key and most important economic activities, and a reliable barometer of economic
performance.

The shift to the east

Prior to the emergence of Korean and Japanese shipyards after World War II, European yards
dominated the world shipbuilding industry. Post-war, the world’s biggest ships were built in
yards in Newcastle (England) and on the Clyde (Scotland).

While shipbuilding still exists in Europe, yards there are focusing more on the so-called Lexus-
class vessels such as chemical tankers, offshore support vessels (OSVs), seismic vessels and
warships and cruise ships.

For example, BAE in England specialises in building naval ships, while Aker Yards (now STX
Europe) in Norway focuses on building cruise and ice-class ships plus a variety of OSVs.

STX Europe yard in St Nazaire, France

During the height of the newbuilding frenzy prior to the current global economic downturn, there
was an upsurge in demand for berths in European yards which had previously lost out to Asian
yards.

This was a result of the spillover from Asian yards which could not cope with tremendous global
demand for new tonnage. European yards have conceded that they could not compete with the
low labour and land costs and economies of scale that yards in Asia enjoy, but the former still
commands a reasonable percentage of the world orderbook of more technically sophisticated
vessels.
A noticeable trend in global shipbuilding in the last two decades or so is the emergence of yards
in developing nations.

China has emerged as a serious player in certain sectors such as in bulk, gas and container. The
emergence of yards in India, Vietnam and Malaysia focusing on small and medium-sized vessels
and even catering for the export markets has also been noticeable They enjoy healthy orderbooks
and even produce for export markets.

Some have even benefited from alliances with more established international shipbuilders who
offer better technologies and processes that have helped improved the former’s productivity,
efficiency and product/service offerings.

As a result of the shipbuilding boom in developing countries, investments from established

foreign yards have poured in. For example, STX has invested significantly in its yards in
Malaysia, the Philippines, Indonesia and Vietnam.

This provides testimony to the growing attraction of the shipbuilding sector in developing
nations which enjoy low cost of production, growing demand for shipping services and
economies of scale.

More shipping companies are buying into shipyards to control their supply chain better and to
create synergy. One such example is MISC’s purchase of MMHE, Malaysia’s biggest yard, to
align the energy carrier’s business with the yards’ capacity in building offshore structures and
vessels to serve the offshore oil and gas industry.

The big gets bigger

Another unmistakable trend is the increased order for bigger and more sophisticated vessels. The
pursuit of economies of scale has driven owners to order bigger ships to capitalise on booming
global seaborne trade.

Bigger volume of cargos transported leads to lower cost per unit to transport them, leading to a
virtuous cycle all around for the various parties along the maritime supply chain.
In the container sector, ships with larger capacity are continuously being built. Several 11,000
plus TEU vessels are already in operation, while orders have been placed for 14,000TEU vessels.
A 16,000TEU behemoth is already on the design board at Samsung, one of Korea’s and the
world’s top yards.

Shipping analysts have even visualised the construction of an ultra large container vessel with an
astounding capacity of 22,000TEU as technically possible.

In the tanker trade, the biggest ULCC is a whopping 550,000DWT behemoth. Amazingly,
vessels of this capacity require only a small number of crew to man. A typical gas tanker in the
Aframax class (oil tanker smaller than 120,000DWT and with a breadth above 32.3 metres)
merely requires a crew of 15 to sail, thanks to its advanced ship features and sophisticated
onboard electronics and equipment.

In the passenger ship category, the construction of giant cruise ships that can carry passengers
has been planned.

Royal Caribbean International has ordered from STX Europe, a passenger ship that can
accommodate 6,400 passengers, the largest in the world to date. If that is not impressive enough,
another giant cruise ship, ‘Princess Kaguya’ that can carry 8,400 passengers has been
conceptualised by Japan Contents Network.

Green and clean

New generation of OSVs powered by gas and equipped with Dynamic Positioning capabilities
and tremendous bollard pull have been built to be deployed at harsh deepwater sites. ROVs with
state of the art technologies have also being built to assist in offshore oil and gas exploration and
production. Then there are also FSO, FPSO and FLNG that incorporate ingenuous design and
impressive features that can fit onto limited space on board. In addition to vessels, yards are also
building all types of offshore structures including rigs, platforms, topsides, jackets and drills to
be deployed in offshore sites.

There is also a growing trend to build eco-friendly ships in line with rising awareness to reduce
green house gas emissions from vessels. Shipyards are also giving greater focus on “green
logistics” to reduce wastage and pollution along their supply chain. With the growing emphasis
on green shipping, shipyards are expected to step to the plate and work closely with shipowners
and equipment manufacturers to come up with energy-efficient ships.
Shipbuilding makes the world go round

Trends in shipbuilding reflect the production, consumption and transportation patterns of the
cargos that ships carry, and the dynamics of the activities and markets they serve.

Observing these trends provide a fascinating glimpse into the dynamics of trade, economies,
industries, technologies, financing and many other aspects of life.

As an economic activity, shipbuilding has a far reaching impact on shipping, trade and the
economy.

The number and size of ships built at shipyards dictate the supply of tonnage for a particular type
of shipping trade, hence influence freight and charter rates of those ships. This eventually
becomes a determining factor in the prices of those cargos and of other goods and services whose
production depends on those cargoe s.

This underscores the immense importance of shipbuilding and its pivotal role in facilitating trade
and economic activities. Shipbuilding is truly a bellwether activity that provides rich indicators
of various trends of a world in flux.