Intelligence into the future market competition the main elements of new ship orders growth

I. Basic overview of the industry

boats and ships is a general term for all kinds of ships. A ship is a means of transportation that can sail or berth in the water area for transportation or operation, and has different technical performance, equipment and structure types according to different use requirements.

According to the "China Ship Market Development In-depth research and Investment strategy Forecast Report (2023-2030)" released by the Guanyan Report network, ships are man-made vehicles that mainly operate in geographic water. In addition, civilian ships are generally called ships, military ships are called ships, and small ships are called boats or boats, which are collectively called ships or boats. The interior mainly consists of the housing space, support structure and drainage structure, with the use of external or internal energy propulsion system. The appearance is generally conducive to overcoming the fluid resistance of the flow linear envelope, materials with the progress of science and technology constantly updated, early for wood, bamboo, hemp and other natural materials, modern is mostly steel and aluminum, glass fiber, acrylic and various composite materials.

Second, industry development status

1. Market size

At present, the scale of China's shipbuilding industry continues to grow, and the three major indicators of China's shipbuilding completion, new orders and hand-held orders remain the world's leading. The capacity structure adjustment of China's shipbuilding industry has achieved results, and the shipbuilding industry is constantly expanding its industrial scale. With the trend of recovery of the international ship market, the industrial concentration of China's ship industry has maintained a high level, and the backbone ship repair enterprises have accelerated the development of high-end green products, green processes, and decarbonization technologies, and accelerated the practical application of information, digitalization and artificial intelligence technologies.

Affected by the Russia-Ukraine conflict and associated sanctions, regional trade growth and other geopolitical and macro environment changes, the world shipping market is also undergoing structural changes, for the use of Europe (Black Sea/Mediterranean Sea and other routes) and Russian ports more used Suez, Afra and other ship types hot demand; More flexible small and medium-sized container ships, refined oil tanker/chemical tanker and other ship types are also relatively considerable. The average age of the above ship type fleet is about 12 years, which is significantly higher than the large ships of similar ships. In the future, with the arrival of more capacity demand transformation and environmental protection replacement superposition, it will inject greater impetus into the new shipbuilding market. In 2022, the market size of China's shipping industry will be 344.356 billion yuan.

Analysis of current industry development characteristics:

(1) The transfer trend of the world shipbuilding industry

Due to the deep bottom of the long cycle of the shipping industry, combined with the global economic downturn and the impact of the new coronavirus epidemic, the three major indicators of the global shipbuilding industry are generally downward. Bulk carrier, container ship and oil tanker three major new ship trading volume differentiation trend is obvious, taking bulk carrier as an example of conventional ship market demand is weak, the internal product demand structure of the ship industry has changed.

The global mainstream ship structure has gradually developed from the traditional three major ship types of bulk carriers, container ships and oil tankers to the five major ship types of bulk carriers, container ships, oil tankers, LNG carriers and passenger ships (including luxury cruise ships). LNG carriers and passenger ships (including luxury cruise ships), as the main representatives of high ship types, have continued to rise in the global ship market demand in recent years, and the proportion of new ship orders in the total order has further increased.

With the adjustment of the global ship type demand structure, China, Japan and South Korea are different in terms of ship type structure, focusing on South Korea taking the lead in effectively responding to market demand, focusing on high-end ship types, with orders mainly concentrated on LNG carriers, oil tankers and container ships, and having absolute competition in the large high-end ship type market, China and Japan have more new ship orders concentrated on ship types. Oil tanker, bulk carrier as the main ship type demand to further stimulate the ship industry competition. The competition pattern of the global shipbuilding industry has caused deep adjustment in the internal and external environment changes, and the competition needs to transfer core strength such as scale, low labor force, manufacturing, innovative technology, and optimized management.

From the demand side, the product structure has changed significantly, the high-tech ship type, energy saving and environmental protection ship type demand is relatively strong with the further adjustment of global shipping capacity, the future high-tech ship type will become the mainstream ship type competition factors in the global market, resulting in China's shipbuilding industry low-cost manufacturing and other traditional advantages gradually weakened. High ship type manufacturing and complete industrial chain have also become an important direction for the transformation and upgrading of shipping enterprises in various countries under the new competitive environment.

(2) Intelligent trend

The formation of the development trend of ship intelligence is mainly based on the multiple promotion of technology and external macro environment. With the development of modern science and technology, the rapid development of industrial Internet, artificial intelligence & and other technologies has provided strong support for the acceleration of the shipbuilding industry process, and the development of intelligent ships has technical feasibility. In addition, in response to the downturn in the ship market and the large excess capacity, shipowners have increased demands for ship operation safety and economy. Intelligent ships have outstanding advantages in improving ship operation efficiency, safety and low ship fuel consumption. At the same time, the implementation of international energy conservation and emission reduction rules and regulations, the future new shipbuilding, operating vessels require the installation of ship energy consumption and pollution detection and reporting system, and further put forward requirements for the information and intelligent degree of ships, the shipbuilding industry as a national water transportation, Marine resources development of an important strategic industry. It is important to the development and maintenance of national Marine resources and the growth of national economy. Made in China 2025 promotes Marine engineering equipment and high ships as one of the ten key development areas, and makes it clear that high-tech ships are an important direction for the transformation and upgrading of China's shipbuilding industry. The transformation of the ship power to the shipbuilding power, innovation-driven, product upgrading is the key goal of the in-depth adjustment of the industry. As an important representative of high ships, intelligent ships will become the main elements of the future competition in the world shipbuilding industry.

South Korea and the two countries in the field of smart ships, South Korean shipping companies in the face of the downturn in the shipping market, shipbuilding orders continue to decline in the context of the industry, the intelligent development of the shipping industry as an important strategic means to improve competitiveness. Prior to Hyundai Heavy's acquisition of Daewoo Shipbuilding, in 2017, Hyundai Heavy launched the global shipbuilding industry's first Integrated Smart Ship Solution (ISSS). Its proprietary information and communication technology (ICT) enables cost-effective navigation and ship ISSS provides operators with a wider range of ships, including optimal navigation routes and navigation speeds as well as the state of the ship's front and rear hulls, thereby minimizing the ship's resistance during navigation. The solution collects and analyzes energy data, monitoring status of engines, propellers, and can operate ships down to 6%, making them safer and more efficient. Hyundai Heavy Industries takes advantage of new technological opportunities such as smart ship technology to steadily grasp the new development of the industry and shift its focus to emerging ways such as ship services and manufacturing. At the same time, combined with its own position in the field of ship manufacturing, enhance competitiveness, and develop in the field of ship intelligence, so that enterprises out of the trough period.

As a veteran shipbuilding power, it has launched research in the field of smart ships earlier, and continues to make efforts to seize market opportunities to reshape the new core competitiveness of Japanese shipbuilding in the global scope. From the perspective of the development trend of Japan's domestic shipbuilding industry, relevant shipping companies and scientific research institutions have carried out a lot of research work in ship intelligence. The Japanese government launched the shipbuilding industry innovation policy named "i-Shipping" to promote the further innovation and strengthening of the shipbuilding industry from four aspects: improving product and service capabilities, expanding fields, improving shipbuilding manufacturing capabilities and strengthening human resources. It aims to apply net and large number to ship operation and maintenance, and comprehensively improve the competitiveness of products by timely feedback on the integration effect of measurement, construction, operation and maintenance. Twenty-seven companies, including the Japan Ship Supporting Association and the Japan Classification Society, carried out the "smart Ship Platform" project research, with a research fund of 1.2 million US dollars. The project aims to develop a ship intelligent control system, combining common on-board monitoring and process data, to develop a unified data mutual platform that can store ship monitoring and operation data, provide various interfaces for ships, navigation & host monitoring, condition monitoring, energy efficiency management, remote maintenance and other functions. The research and development of intelligent ships has been listed as the development focus of the shipbuilding industry in Japan in the next five years.

At present, the development of intelligent ships in the world is still in its initial stage, and will further occupy market share in the future, becoming the mainstream field of technology research and development and innovation of global shipping companies. South Korean shipbuilders are committed to developing autonomous sailing ships and establishing operation service systems. South Korea aims to develop a LEVEL4 intelligent ship with 90% of the entire ship automation, develop and establish a self-sailing ship trial center and a long-range navigation control center for self-sailing ships in the port, form intelligent ship application services and systems, and plan to achieve real ship applications on 1700TEU container ships in 2024. Japanese enterprises focus on the standardization of ship-shore and shipping industry data, and Japanese enterprises establish smart ship data centers through the smart ship application platform development project (SSAP1/SSAP2), and are committed to developing ISO standards and seizing first-mover advantages. The European Union has developed a control system with unmanned autonomous control technology and remote control technology as the core, and plans to complete the development of unmanned ships and the feasibility verification of autonomous navigation by 2034.

The continuous update and practice of intelligent ship technology and application will break the original ship shipping energy efficiency system, comprehensively improve energy efficiency, operation, cost, environmental protection and other aspects, and gradually replace the traditional old ship type and become the mainstream ship type in the future. Therefore, the development and application of ship intelligence has become a new blue ocean for national ship companies to seize market opportunities.

(3) The trend of merger and reorganization

From 2005 to 2008, the shipping industry was affected by the prosperity of the economic situation, the shipping business was busy, and the market demand reached the peak. Under the stimulation of the market, the shipbuilding industry has developed rapidly, and shipping enterprises have continued to expand, resulting in production capacity reaching a high point at the same time. After the financial crisis in 2008, the shipping business was depressed, and the shipping industry fell into the dilemma of supply and demand imbalance and overcapacity. Problems such as low concentration, repetitive construction, and disorderly competition superimpose the low prosperity of the global ship market, which greatly hinders the continued development of the industry. A large number of small and medium-sized enterprises comply with the law of the market naturally eliminated out, the struggling large ship enterprises how to get out of the dilemma, effectively enhance competitiveness, improve economic efficiency, digest excess capacity has become an urgent problem to be solved. Merger and reorganization, bankruptcy, storage as the three ways to digest capacity, in line with the objective law of market development, merger and reorganization has become the general trend of the shipbuilding industry to digest capacity.

Successful restructuring and mergers will give rise to monopoly power in the industry, improve industrial concentration, and then increase industry profits. Whether it is the "concentration determines profit rate" hypothesis of Harvard School SCP paradigm that high concentration brings monopoly profit, or the refuting of this hypothesis by Chicago School, that is, the high profit rate in the high-concentration market is the result of the efficient operation of large enterprises, and believes that high concentration will increase the industrial profit rate. Successful restructuring activities will bring synergies and integrate more advantageous resources to achieve. "1+1>2" effect The concentration of the world ship market is further increasing through mergers and acquisitions.

Japan and South Korea have different ways to deal with overcapacity. In the late 1990s, after the Asian financial crisis caused the industry to stagger and decline, the first wave of restructuring occurred in South Korea. During this restructuring, two of the three major Korean shipbuilders emerged: ----- Hyundai Heavy Shipbuilding Group, which was formed after Hyundai Heavy Industries acquired Mipo Shipbuilding and Hanna Heavy Industries; Daewoo Shipbuilding & Marine Engineering Co., LTD., one of the three largest shipbuilding companies after the bankruptcy reorganization of Daewoo Heavy Industries. First, after the 2008 global financial crisis, the South Korean government eliminated small and medium-sized enterprises with weak strength through credit differentiation policies, and supported large and medium-sized enterprises with strong technology and large scale. In terms of the structural management of ship enterprises, medium-sized enterprises are encouraged to withdraw from the fields of LNG, VLCC, and military products, and focus on the competition with Chinese and Japanese enterprises in the fields of medium and low-end ship types such as oil tankers, dry bulk carriers, and small and medium-sized container ships, so as to reduce the internal competition of domestic enterprises in high-end ship types. For example, Hyundai Heavy Industries transferred its shares in Hyundai Motor and KCC. After two large-scale restructuring, the integration of product structure advantages of South Korea's shipbuilding industry has avoided repeated investment and repeated construction, and obviously played a synergistic advantage and scale advantage, which has created a foundation for the breakthrough of high-end technology in South Korea's shipbuilding industry and the maintenance of global market share.

Japan's restructuring activities in the early 1970s mainly relied on the government, according to the size of the enterprise to reduce the capacity of the corresponding provisions, large-scale enterprises to reduce production capacity more, so many backward production capacity was stripped off at this time, and small enterprises due to their own technical defects, it is difficult to survive after the reduction, bankruptcy, merger and even change industries. In the late 1990s, the Japanese government continued to cut production capacity and planned to reduce the number of companies in the industry, transforming the country's seven largest companies into three or four. This large-scale restructuring has laid a good foundation for Japan to obtain the high-end technology ship type market and effectively improved the overall strength of the Japanese shipbuilding industry. In 2011, the Japanese government once again promoted the strategic restructuring of shipping companies to further improve the competitiveness of the international market.

Combined with the restructuring activities of Japanese and Korean shipping companies, it is not difficult to see that the complementary advantages between shipping companies and the innovation model of strong and strong alliance have promoted the development of the overall technical level of the industry and helped shipping companies to obtain the monopoly position in core competitiveness and high value-added products. At present, the development path of restructuring and integration of global shipping companies is still continuing. In March 2019, Hyundai Heavy Industries announced that it had signed a formal agreement with the Korea Development Bank (KDB), the largest shareholder of Daewoo Shipbuilding and Marine Engineering, to establish a new company, Korea Shipbuilding and Marine Engineering Corporation (KSOE), in June 2019. The combination of Hyundai Heavy Industries and Daewoo Shipbuilding and Marine Engineering further brings together advanced construction capabilities, strengthens the competitiveness of the Korean shipbuilding industry on a global scale, effectively alleviates problems such as low prices and reduced orders caused by excessive competition among global shipping companies, and improves the bargaining power of shipping companies. At the same time, the combination of the two will reshape the global LNG carrier market pattern, bringing greater pressure to Chinese and Japanese shipping companies. At that time, as the world's largest shipyard with the largest shipbuilding volume, Hyundai Heavy Industries Group continuously enhanced its ability to resist market risks and optimized investment in emerging markets with development potential through acquisitions and mergers, focusing on increasing investment in markets such as luxury cruise ships, large LNG carriers and offshore engineering equipment. In December 2019, Imabari Shipbuilding (Imabari Shipbuilding), Japan's largest shipbuilder, and Japan Marine United (JMU), the second largest shipbuilder, announced an agreement on the basic matters of capital and business cooperation. Imaji Shipbuilding will acquire about 30% of JMU's equity through the purchase of new shares to form a new company, which will be involved in the design, construction and sales of oil tankers, cargo ships and transport vessels. In 2019, Imaji Shipbuilding and JMU accounted for about 40% of Japan's total shipbuilding. After joining forces, the newly established joint venture is expected to hold a 10% market share in the global shipbuilding industry, further enhancing market competitiveness.

2. Supply scale

In the past two years, with the substantial growth of new ship orders, the demand for ship supporting equipment has significantly increased, and the capacity of ship distributing enterprises is difficult to rapidly improve in a short time, and the phenomenon of product price rise and supply delay is more common. In addition, due to the impact of the novel coronavirus epidemic, the production cycle of supporting equipment, logistics costs and transportation cycles have generally increased. The supply of some imported supporting equipment is more tight, the average arrival cycle of ship communication, navigation, automatic control system, electronic and electrical equipment is 1-3 months longer than normal, and the arrival cycle of ship chip, crankshaft, piston ring and control system is 3-6 months longer than normal.

In 2022, the number of ship orders in hand in China has once again exceeded 100 million deadweight tons after 6 years, and the average production guarantee coefficient of ship enterprises (the average number of orders in hand/the average amount of completion in the past three years) is about 2.7 years, and the shipping date of some enterprises has been scheduled to 2026. At present, the production tasks of ship enterprises are full, especially with the rapid growth of high-tech ship orders, the demand for skilled labor is greater. In recent years, due to the impact of the new coronavirus epidemic, there has been a large loss of migrant workers in shipping enterprises, and recently due to the increase in the number of infections, the staff attendance rate has decreased significantly, which has exacerbated the labor tension. The contradiction between full production tasks and insufficient labor supply of shipping enterprises has further expanded, and the problem of the stability of labor force has become more prominent.

3. Demand scale

In 2022, China's shipping enterprises will consolidate their leading position in the market of advantageous ship types and consolidate the foundation of new ship orders. Among the 18 major ship types in the world, China's new orders for 12 ship types rank first in the world. New orders for bulk carriers, container ships, automobile carriers and crude oil carriers accounted for 74.3%, 56.8%, 88.7% and 66.1% of the global total, respectively. In particular, major breakthroughs were made in the field of large LNG carriers, and the international market share of new orders for large LNG carriers in the year exceeded 30% for the first time. During the year, the structure of new ship orders was optimized and improved, and the repair load ratio (revised gross ton/deadweight ton) reached 0.468, which was the best level in history.

Third, industry competition pattern analysis

From the perspective of development, the current competition pattern of China's shipbuilding industry is a "three-legged" pattern of central enterprises, local shipbuilding enterprises and private shipbuilding enterprises. The central enterprise is China State Shipbuilding Group Co., LTD., while the local shipbuilding enterprises and private shipbuilding enterprises are mainly distributed in the Yangtze River Delta and Pearl River Delta, such as Jianglong Shipbuilding, Yangtze River Shipbuilding, New Era shipbuilding, Golden Bay shipbuilding and so on.