2012 ASEAN Maritime Industry Asia Pacific Market InsightsFrost & Sullivan’s commentary on the Aerospace & Defense market addressing opportunities, best practices, and major events “We accelerate growth”
Maritime Industry OverviewOverviewThe maritime industry is a complicated industry that is highly dependent on factors such as global economic andtrade development. These factors, in turn drive growth of shipbuilding, the key sector of the maritime industry.This industry is usually marked by a few large companies controlling a majority of market share along with the restof the participants made up of a large number of small/medium size companies. However, the average sizes ofthese companies differ strongly from country-to-country. This insight particularly focuses on the shipbuildingsegment of the maritime industry. Certain issues such as unemployment, recovery of the global economy, alongwith some natural disasters in the APAC region have negatively affected the growth of maritime and shipbuilding.However, this industry has been constantly evolving and taking measures to safeguard against such crises. Figure 1: Vessels ordered by Countries in Asia (2001-2011) As shown in figure 1, Japan, China and South Korea 4000 20% collectively ordered the most number of vessels in 3000 15% Asia during 2001 to 2011. It is interesting to observe that percentagewise, China together with Korea and 2000 10% Japan represent nearly 28.5%of the world’s total order 1000 5% book of new shipbuilding. Following closely on 4th, 5th and 6th places are Singapore, Hong Kong and 0 0% Malaysia each contributing less than 3% of the total number of vessels ordered during the period of 2001 to 2011. With economic recovery plans taking the right Number of Vessels Total as % of World Total course, the demand for new vessels is expected to Source: Frost & Sullivan grow drastically by more than 20% in the near future.OutlookSeveral ASEAN countries’ such as Singapore and Malaysia are expanding their sea ports to increase traffichandling capacities which in turn is facilitating growth of this industry. Singapore, for instance, plans to increase itsport’s capacity from 29.9 million TEUs (Twenty Equivalent Footers) in 2011 to 55 million TEUs in 2018 to meet upwith seaports’ handling capacity in the region. Malaysia’s Port Klang is expected to also see a drastic jump of 2million TEUs (Twenty Equivalent Footers) in traffic reaching 10 million TEUs in 2013, from 8 million TEUs in 2012.According to the Malaysian Ship Building and Ship Repair (SBSR) plan, Malaysia is poised to be one of the majorship building nations in the region with close to 20000 white collar jobs opening up by 2020 and plans to capturealmost 4/5th of the local shipbuilding market by 2020. The country enjoys certain strengths such as its strategiclocation, serving as a strong logistics hub in the region, financial stability and a skilled workforce. However, certainweaknesses also include lack of government involvement, lack of modular technology and marketing presence.As part of its growth strategy, Malaysia plans to focus on building small/medium size vessels of up to 30,000tonnes rather than large container vessels. Indonesia is one of the other lesser known countries in the regionwhich is also poised for Maritime growth in the near future as it is now shifting its focus beyond domestic trade tointernational trade. China, India, Vietnam and Philippines are among others rising to become shipbuilding nationsin the APAC region, with offers of business incentives especially in the form of skilled cheap labour.Implementation of the ASEAN Economic Community (AEC) by 2015 will broaden production and distributionnetworks, thereby supporting the maritime industries among member countries. ASEAN has also determinedpriorities that cover opportunities in cooperation in maritime connectivity and the development of port facilitiesamong ASEAN member states.ConclusionThe international character of this industry and its cyclical pattern are expected to slow regional growth. However,the overall outlook for the Asian maritime industry looks bright as new initiatives are being taken by businessesand governments in the region. Several other initiatives are also being undertaken by certain Asian countriessuch as the Philippines and India to boost growth of this industry. For instance, the Philippines is laying outinvestor-friendly laws with attractive incentives to lure investors while the Indian government is currently offeringsubsidies on foreign sales of all vessels and on local sales of vessels longer than 80 meters. For this volatilemarket in APAC, it is important to have close co-operation in the shipbuilding and marine equipment supplyindustry to bring about changes that will have positive effects. For emerging shipbuilding nations such as China,Vietnam, the Philippines and India, shifting the focus to also include more R&D activities will help boost keep upthe market growth in the future.