Fleet Construction Costs to Stabilize in 2025: Market Forecast

Global shipbuilding is currently experiencing a supercycle, driven by the need to replace vessels delivered during the 2005–2010 period, according to a report from shipbroker BRS. Gilbert Walter, CEO of BRS, stressed that shipyards are likely to see a slowdown in order placements even with additional capacity coming on stream. He noted that, similar to early 2025, the rest of the year is expected to remain unpredictable with the cost of older ships falling, and newbuild prices leveling off.

The analysts at BRS revealed that the average construction time for ships (at available slipways) in 2024 exceeded four years, with the production of main engines being the primary bottleneck. They also highlighted that 2024 marks a new phase for China’s shipbuilding expansion – nearly twenty years after its previous boom that established the nation on the international shipbuilding scene.

BRS estimates that after the expansion phase, the number of new ships built worldwide will increase by about 200 per year, from approximately 1 500 to around 1 700 annually. This comes in the context of the United States, which delivered only five large commercial vessels in 2024 and is considering imposing penalties on Chinese-built ships entering its ports.

Currently, there are around 348 active shipyards worldwide that either secured new contracts or delivered vessels in 2024 – a figure falling to roughly 50 % of the 2007 peak when there were about 700 active shipyards.

BRS asserts that in 2021 the global shipbuilding industry started a supercycle analogous to the 2003–2008 boom. According to their theory, the necessity to replace ships built during that boom—when annual construction volume jumped from 1 483 vessels in 2005 to 2 591 in 2010 – is driving this cycle. These older ships, now entering the 20-25-year stage, were designed and built before the ecological regulations of the 2010s, making them due for replacement with more efficient models.

Despite available capacity at shipyards, the production of main engines might not match the demand for new vessels, potentially creating a bottleneck in fleet construction. BRS forecasts that this year the new build orders will total around 100 million DWT, which is significantly lower than the previous year’s 193 million DWT. The uncertainty in geopolitical conditions and market pressures on freight rates are causing owners to delay their investment programs. Meanwhile, the expansion in shipbuilding capacities could lower construction costs by more than 10 % by the end of 2025, depending on the vessel type and size.

However, another research firm, Clarksons Research, notes that despite a 1% drop in the price index since the start of the year, the overall cost of constructing a new fleet remains high.