Shipbuilding

The business opportunities for shipbuilding industry get derived from shipping industry. Shipping companies form the biggest customer base for commercial Shipyards. Hence, fortunes of shipbuilding industry are highly dependent on economic and growth prospects of shipping industry. The demand supply situation in shipping industry largely affects shipbuilding industry.

The lead time is anywhere between 1 year to 3 years for the delivery of a new ship. Orders are placed in anticipation of the ship’s future use. In many cases, companies even enter into a charter agreement in advance, which makes it absolutely imperative and critical for the shipyard to deliver within specified deadlines.

As situation stands in 2015, the global shipping industry is largely oversupplied. However there are small pockets with demand supply gap. This has led to new ordering to Shipyards. Growing trade has consumed surplus fleet of ships globally to a certain. This coupled with prospects of increase in charter rate has led to shipping companies placing orders for new building of ships in select segments and sizes. Shipyards have begun to receive enquiries for revival of some of the ships which were cancelled earlier due to financial difficulties with shipping companies. This opens up opportunities for Shipyards. However it would still take several years before the present demands for ships and orderbook of Shipyards reach early highs which were witnessed in the year 2007.

Similar to shipping industry, shipbuilding industry is also a global industry. It is a capital intensive industry with substantial influence of low-cost workforce. Therefore, regions/countries with favorable support from government in creation of infrastructure and availability of low-cost workforce has higher dominance of shipbuilding industry. This has led to the rise of China as one of the largest shipbuilding nation. This rule mostly does not apply to countries or Shipyards building ships with highly specialised technology. Some of the examples could be explained as building LNG ships, specialised steel tankers by Japan, Cruise ships By European Countries and Large Offshore Drilling Rigs In South Korea and Singapore.

 

There are close to 20 Shipyards in India. Following images describes various Shipyards with their ownerships located in India