The marine market in 2024 has been affected by a confluence of geopolitical events, environmental challenges, and evolving industry demands. Trends within the marine market vary significantly across different segments. Wärtsilä’s key segments include cruise, ferry, and offshore.
Wärtsilä continuously monitors the marine market environment through various channels. One essential source of intelligence for understanding the marine industry is Clarksons Research, specializing in comprehensive data, analysis, and insights on shipping, shipbuilding, offshore, and energy markets. Clarksons’ forecasts for the marine industry are updated biannually, around the end of March and September.
This article is based on Clarkson's forecast and estimates only.
Increased vessel order expectations for 2024 and 2025
In September 2024, Clarksons Research Shipping Forecast revised its projections for vessel orders, now expecting 2,203 ships (>2,000 dwt/GT) to be ordered in 2024 and 1,948 ships in 2025. This marks an increase of approximately 17% for 2024 and 5% for 2025 compared to previous forecasts in March. The surge is driven by strong investment appetite in containerships, tankers, and ongoing demand in LNG and cruise sectors. Clarksons Research forecasts 24 cruise ships to be contracted in 2024, with a significant increase from 11 forecasted in March. In 2025, a total of 20 cruise ships are expected to be ordered. In both years, the order activity in the +100,000GT sized ships is expected to grow the most compared to the previous forecast from March. In the ferry segment, Clarksons Research forecasts moderate demand continuing.
Conversely, Clarksons Research Offshore Forecast expects only a gradual increase in the offshore newbuild market due to financing challenges, limited yard capacity, and the complexity of alternative fuel choices. They project 200 offshore units to be ordered in 2024 and 227 units in 2025, reflecting a 4% increase (8 units) from the previous forecast for 2024 and a 13% decrease (34 units) for 2025.
Strong demand for new ships in the long term view
Clarksons Research Forecasts indicate that the demand for new ships will remain strong even in the longer term, especially due to the green transition and the ageing of the ship fleet. In the period 2024-2034, according to Clarksons Research's forecast, new ship orders are expected to accelerate into the 2030s with an average of 2,202 ships to be ordered per year. This is 4% more ship orders compared to the previous forecast and about 25% more than the average of the last ten years. During this period, approximately 65% of the ordered ship capacity is expected to replace the older fleet. The average age of the fleet in gross tonnage has risen to 12.7 years from 9.7 years a decade ago. The outlook for the retrofit market is also encouraging as owners invest in improving fleet efficiency to comply with stricter regulations. For example, 35% of the tonnage and approximately 65% of new ship deliveries now have at least one energy efficiency-improving solution installed, while the corresponding figures were 25% and 50% in 2020. In addition, the increased interest of shipowners in ship fuel conversions supports the prospects of the retrofit market.
Global shipyard capacity on an upward trend
According to the latest update of Clarksons Research, global shipyard capacity is on an upward trend, with a recent acceleration in announcements of projects to expand facilities, particularly in China. By 2030, global capacity is projected to regain around half of the volume lost since the last shipbuilding boom, with Chinese capacity exceeding previous highs. Global utilization is expected to remain elevated throughout this period. Clarksons Research predicts that the shipyard capacity could reach 80-85% of the 2011 peak level by 2030. Today the shipyard capacity is around 70% of the 2011 peak level and around 15% above the 2020 low point. The 2020 low point was the result of continued weaker demand for new ships through most of 2010's, forcing the shipyards to remove excess capacity. In addition, the pandemic caused major disruptions in global supply chains, affecting shipping schedules and port operations. The industry has been recovering as global trade volumes have increased, supply chains have stabilized, and demand for shipping services has recovered.
Overall, Clarksons Research expects the marine market to experience robust growth and investment, driven by fleet renewal, green transition initiatives, and strong demand across various shipping sectors. However, challenges such as capacity constraints, pricing pressures, and technological uncertainties remain.
Q&A
Why do market estimates in Wärtsilä's materials seem to differ from Clarksons estimates?
Wärtsilä focuses on certain key segments that are relevant to us, i.e. monitoring the entire shipping market does not directly describe Wärtsilä's opportunities. Clarkson's data focuses on the number of ships, while Wärtsilä has made estimates based on Clarkson's data about what kind of ships will be ordered and translated this to MW.
How much more runway is there on the marine order growth?
Clarksons expects that the total order volume of new ships will continue to run at 2024 levels or above for the years 2024-2034, as shipowners will continue to renew their fleets to keep those compliant and competitive. There is typically a 12–18-month lag from a vessel order until the order for equipment is placed.
What changes did Clarksons Research Forecast make in September 2024 compared to March 2024?
The key change in Wärtsilä’s key segments since March according to Clarksons Research was that cruise was revised up following continued firm activity over past months. The forecast for ferries and offshore remained largely unchanged since March.
Clarkson is now projecting 2,203 vessels (>2,000 dwt/GT) to be ordered in 2024. This is an increase of ~17% or 324 ships from the previous forecast driven by strong investment appetite in containerships, tankers, ongoing demand in LNG, and improved cruise. The forecast for the average annual number of contracts for ships in the years 2024-2028 increased by 6% from the previous forecast in March. In the years 2024-2034, according to Clarksons Research's forecast, new ship orders are expected to accelerate into the 2030s with an average of 2,202 ships to be ordered per year, which is 4% more ship orders compared to the previous forecast and about 25% more than the average of the last ten years.
Newbuild order volumes for containerships have been revised up substantially for this year, up from 185 contracts to 322 contracts, as operators have continued their fleet renewal plans. The contracting forecast for containerships between 2025-2030 has been revised up as well.
Overall, Clarksons expects medium- and long-term volume strength due to major fleet renewal and green transition, although uncertainty around technology and emission policy remains.
Which segments have the strongest growth prospects according to Clarksons Research Forecast?
For our key segments, Clarksons sees positive trends in demand for cruises to continue, meaning further investments into cruise capacity to cater for the growth in demand are needed. Clarksons forecasts the newbuild ordering of cruise ships to remain elevated in 2025, with 20 orders projected. Although that is a decline in absolute terms from forecasted FY2024 levels, it is still over 40% above the long-term average (1996-2023) activity level.
In the ferry market, the ageing fleet continues to drive demand for fleet replacement. Clarksons is expecting the new-build demand for ferries to increase in 2025 by 25% year-over-year.
In offshore markets, the demand is expected to grow gradually and due to current capacity limitations, the expectation is that owners will need to order more capacity than in 2024. Clarksons forecasts that there will be around 14% growth for offshore units ordered in 2025 compared to 2024.
