Shipbuilders riding crest of global orders

Confronting headwinds

The United Steelworkers, an industrial union with 1.2 million members in North America, led a coalition of labor organizations to file a Section 301 petition in mid-March, urging the United States Trade Representative to start an investigation into China's commercial shipbuilding industry. The petition alleges that China's practices in this sector are "unreasonable and discriminatory", ultimately leading to their significant influence in the global shipbuilding market.

Following submission, the US government has 45 days to decide on whether to initiate an investigation in response.

Speaking at a news conference earlier this month, He Yadong, spokesman for China's Ministry of Commerce, dismissed the accusations leveled by certain US organizations against China as "entirely baseless", and stressed that China will closely follow how it proceeds, and take necessary measures to ensure its businesses' legitimate rights.

The commerce ministry official emphasized that numerous reports have highlighted that the decline of the US shipbuilding industry primarily stems from excessive protectionism. Conversely, the growth of the Chinese shipbuilding sector has been driven by advancements in technology, emphasizing high-end, intelligent and environmentally sustainable growth.

Cao Lin, a senior analyst at Beijing-based Chinese Society of Naval Architects and Marine Engineers, said even if shipowners do not place orders with Chinese shipyards, it is unlikely they would turn to US shipyards.

"This is because the US has been unable to effectively address a number of constraints in its shipbuilding industry for a considerable length of time, such as the development and testing of designs, the related supply chain, industrial workers and efficiency and profitability," said Cao. "From this perspective, the US shipbuilding industry is significantly behind even its European counterparts."

China's shipbuilding industry is increasingly embracing self-sufficiency, especially within its industrial and supply networks. This shift toward domestic production has significantly reduced both the time and cost associated with various projects, said Pan Helin, a researcher at Zhejiang University's International Business School in Haining, East China's Zhejiang province.

In the competitive market, the ability to deliver ships more quickly often results in more orders from shipowners, said Pan, adding that by sourcing materials locally, Chinese shipyards have not only fostered the expansion of their own industrial ecosystem, but have also seen an uptick in profitability. This strategy will continue to yield benefits for both shipyards and their international clients.

Boosted by these factors, shipyards in Jiangsu province exported 65.53 billion yuan worth of ships of various types in 2023. These included heavy-duty dredgers, wind turbine installation vessels and car carriers, marking a year-on-year increase of 37.1 percent and ranking first in export scale nationwide, statistics from Nanjing Customs showed.

According to a report released by Liaoning province-based Dalian Maritime University, the shipbuilding industry is characterized by its complexity, extensive supply chain and strong industrial connections, encompassing more than 50 diverse industries such as steel, nonferrous metals, machinery and electronics.