SHIP CONVERSION MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

Ship Conversion Market Size and Trends

The global ship conversion market size is expected to be valued at US$ 14.34 billion in 2023 and is expected to reach US$ 24.10 billion by 2030, growing at a compound annual growth rate (CAGR) of 7.7% from 2023 to 2030. Ship conversion involves modifying or retrofitting vessels for purposes other than their original intended use. This includes converting commercial ships for military applications, cargo carriers to passenger ships, tankers to offshore vessels, etc. The rising seaborne trade and the need to comply with environmental regulations are key drivers fueling the growth of the ship conversion market.

Ship Conversion Market Trends:

• Adoption of new technologies: Ship owners are increasingly adopting new technologies such as hybrid propulsion, batteries, and fuel cells through conversions to enhance efficiency and comply with emissions rules. Electronic systems for navigation, automation and propulsion systems also see strong retrofitting demand. AI-based condition monitoring systems are being integrated into existing fleets. For example, in 2021 South Korea's Hyundai Mipo Dockyard completed an extensive conversion of a very large crude carrier (VLCC) to operate on LNG, demonstrating the viability of conversions for transitioning existing tonnage to less polluting fuels. Between 2020 and 2022, orders for ship conversions to install scrubbers, ballast water treatment systems, exhaust gas cleaning systems, and preparations for dual-fuel propulsion more than doubled according to the International Maritime Organization, demonstrating strong market demand. Major classification societies like DNV and LR have supplied technical advisory on over 150 such retrofit projects during this period as well. The long-term outlook suggests technology adoption through vessel conversions will continue to reshape and grow this important sector of the shipbuilding industry.
• Focus on operational efficiency: Obtaining higher operational efficiency is a key priority. Companies are offering comprehensive conversion solutions involving machinery upgrades, waste heat recovery systems, optimized hull designs etc. to improve ships' fuel economy, speed and payload capacity. This focus on operational efficiency is driving significant business in the ship conversion market. Data from the International Maritime Organization shows that over 300 ships were already equipped for LNG usage as of 2021.Major shipping companies like Maersk have committed to deploying LNG-powered ships via retrofits by 2025 in order to reduce carbon emissions by 25%. Their actions are indicative of the wider push for cleaner marine fuels and propulsion technologies among global fleet operators. The ship conversion market has increasingly focused on operational efficiency in recent years due to rising fuel prices and concerns about environmental sustainability. Ship owners and operators want to maximize profitability by minimizing operating costs, particularly fuel usage and carbon emissions. Converting ships to use cleaner and more efficient fuels as well as installing new technologies that boost efficiency has thus become a major priority.
• Ship life extension services: With new ship builds becoming expensive, conversions are widely undertaken to extend the life cycle of vessels. By upgrading aged systems, refurbishing interiors and replacing corroded sections, ship life can be prolonged by up to 15 years. This provides better asset utilization and saves on new construction costs. As ship owners seek to squeeze additional years of profitable operations out of older ships rather than purchasing new builds, the demand for conversions aimed at upgrading, renovating and modernizing existing tonnage has increased sharply. Conversion contracts supported over 65,000 shipyard jobs in Europe in 2021 according to data from the European Commission. However, ship-owners demands have also become more complex as they need conversions delivering comprehensive solutions to maximize efficiency gains from older assets. Those able to meet this demand for comprehensive renovations will gain an advantage in this growing segment. Yards adapting swiftly to these demands stand to reinforce their role in this essential component of maintaining an aging global fleet. In summary, as ship owners increasingly pursue service life extensions, the conversion market is experiencing higher workload but also requires to satisfy the holistic upgrades vessels.
• Transition towards gas-fueled engines: LNG is gaining wider acceptance as an alternative marine fuel. Converting conventional diesel-driven ships to dual fuel or gas-only engines is rising. Along with emissions compliance, the price advantage of LNG over other fuels is also driving such engine conversions and tank storage retrofits. The trend of transitioning towards gas-fueled engines is having a significant impact on the ship conversion market. Many shipping companies are looking to convert their existing fleets to run on cleaner burning fuels like liquefied natural gas (LNG) instead of conventional heavy fuel oil. For instance, the number of LNG bunker vessels certified by Norway's classification society DNV increased from 17 in 2020 to 34 by early 2023, indicating the growing focus of countries and ports on facilitating gas-fueled ships. Overall, the gradual tightening of emission norms by IMO and growing availability of LNG as a marine fuel alternative is driving more ship owners and operators to explore conversion solutions, significantly boosting the prospects of this segment of the ship conversion industry.