The German shipyard association complains that “normal market mechanisms have been overridden” by state subsidies for Asian shipyards running into the billions.
From the point of view of German shipbuilders, Europe’s shipyards are falling further and further behind their Asian competitors.
Of an order volume of around 30 billion dollars (28 billion euros), shipowners from the EU awarded 57 percent to South Korea and 38 percent to China last year; only one percent of them landed in the EU, reports the Association for Shipbuilding and Marine Technology (VSM). “After two weak years, Europe has lost ground again in terms of new orders,” says VSM Managing Director Reinhard Lüken. The situation is similar with the order volume of around four billion euros from German shipowners.
Container ships: market has doubled in 2021
The VSM has been complaining for years that China and South Korea are supporting their shipyards with billions in subsidies. “Normal market mechanisms are overridden due to government intervention in Asia,” says Lüken. Despite record demand in some market segments, prices were called in 2021 that were up to 30 percent below the prices of 2007 and “definitely do not cover costs”. After the Corona dip in 2020, the world market for new ships roughly doubled in 2021, especially container ships, but the gas tanker market also has “historic order highs”.
Against this background, according to the VSM, Europe is threatened with the total loss of seagoing shipbuilding. “We have to do something so that we don’t lose this industry, this strategic ability in Europe. If we haven’t done that, we still have 10 years,” said Lüken. “After that, Europe will no longer play a significant role in seagoing shipbuilding simply because the players are no longer there.”
From the point of view of the shipyard association VSM, the EU sanctions against Russian billionaires are not a catastrophe for the German mega yacht builders. Contrary to public impressions, the market is not exclusively a market for Russian oligarchs, said Reinhard Lüken, Managing Director of the Association for Shipbuilding and Marine Technology (VSM), on Monday in Hamburg. The market for super yachts has “a significantly larger customer base” and the importance of Russian customers has actually “decreased in importance” in recent years compared to customers from America and the Middle East.
German shipyards in a field world class
The EU sanctions against Russian billionaires in response to Russia’s attack on Ukraine had put megayachts in the public spotlight. The construction of these technologically sophisticated ships, often costing several hundred million euros, is one of the few small but fine niches in global shipbuilding in which German shipyards are among the best in the world. They are currently not allowed to build, refit or repair ships for Russian oligarchs that are on the EU sanctions list.
The association has no information on the exact extent to which the sanctions will affect German manufacturers of super yachts. “The mega yacht market is a discrete market, so I really can’t say how that will play out,” says VSM President Harald Fassmer. “Of course, the situation is currently not nice for our members in the market, but it’s not catastrophic either,” adds CEO Lüken.