The German Shipbuilding and Ocean Industries Association (VSM) demanded Berlin and other European governments to reduce their dependence on China for all things regarding to maritime.
According to VSM, European shipyards were left defenseless against the price dumping practices in conventional market segments, which have forced numerous production sites to close down. The cruise ship segment, the dominating market for Europe’s shipbuilders with orders amounted to approximately 80 billion euros between 2016 to 2019 nearly completely dried up. While ship production stabilized in 2021 after an extremely weak previous year, the low order volume spells significant risks of underutilization of shipyards ahead.
The ongoing lost of substantial shipbuilding capacity is particularly worrisome in view of strongly growing requirements in Europe. In order to safeguard against the loss of strategic capabilities, existing framework conditions for the sector need to be corrected
[smlsubform prepend=”GET THE SAFETY4SEA IN YOUR INBOX!” showname=false emailtxt=”” emailholder=”Enter your email address” showsubmit=true submittxt=”Submit” jsthanks=false thankyou=”Thank you for subscribing to our mailing list”]
VSM also expressed its respect and appreciation for the commitment and decisive actions, especially from the Federal Ministry of Economics under Minister Habeck. The maritime industry plays a key role in the search for alternative solutions. “The maritime sector connects the German economy with the world, enabling us to diversify our sourcing of energies, essential raw materials, and semi-finished products, and to reduce unhealthy dependencies,” said VSM.
In addition, while the global demand for new ships has doubled, orders placed in Europe have declined by another 20%, even compared to the extremely poor previous year. In 2021, 85% of global orders went to China and Korea. Both nations’ governments have been subsidizing their maritime industries massively for years.
Even Japan, while maintaining a relatively high domestic demand, barely contributes 10% to the global order intake today. Europe’s market share has dropped to less than 4%.
At the same time, many maritime equipment suppliers report growing problems, especially in their business activities in China, a situation seen in other industries, as well. Problems include local-content requirements, discrimination, and interference by party officials
The EU is risking a dramatic loss of shipbuilding capabilities
German shipyards said that they can only accept orders based on fully cost covering prices. They can neither offer government-subsidies nor hope for the government to make up for their financial losses. Despite the record demand seen in some market segments, Chinese shipyards are offering shipbuilding prices today which are up to 30% lower than 15 years ago.
Korean shipyards which have kept up with this price competition recorded losses of 3.3 billion dollars in 2021.
Without a fundamental change in shipbuilding policies, Europe will lose the capability to build seagoing merchant ships on any significant scale over the coming ten years
Already today Europe’s shipping sector is highly dependent on supplies from China. German Shipowners have placed newbuilding orders worth 4 billion euros. 55% of them went to China and 44% to Korea, the G20 economy with the highest dependency on Chinese pre-manufactured products. While the shipping sector benefits significantly form state support measures, barely 1% of newbuilding investments remain within the EU.
China’s enormous influence on the global freight transport has become evident in the context of the current disruptions due to Covid-induced port lockdowns. At the same time, China continues to expand its influence via favorable financing for newbuilding orders
VSM added, saying that “the German federal government has become aware of its painful dependence on Russian energy sources and is now taking decisive action to address this issue.”
