North America Shipbuilding Market Outlook to 2028

North America Shipbuilding Market Overview

• The North America Shipbuilding Market is valued at USD 50 billion, driven by a combination of factors including the strong demand for naval and commercial vessels, government defense budgets, and advancements in shipbuilding technologies. A significant driver behind this value is the growing need for modernizing outdated fleets in both commercial and military sectors. As the maritime transport industry continues to evolve, shipbuilders are focusing on sustainable and efficient ship designs that meet global environmental regulations.
• In this market, the United States and Canada stand out as dominant players. The United States benefits from substantial government investments in naval shipbuilding, especially through its defense contracts and the construction of advanced military vessels. Canadas dominance stems from its strategic geographical location for Arctic exploration and its commitment to naval modernization programs. Both countries shipyards are equipped with advanced technologies and skilled workforces, which position them as key players in the North America shipbuilding landscape.
• The U.S. government has launched a long-term naval shipbuilding plan to modernize its fleet and enhance maritime security. In 2024, the Department of Defense allocated $30 billion towards building new destroyers, submarines, and support vessels. This initiative is part of a broader strategy to increase the naval fleet size to over 300 ships by 2030. The program also includes investments in digital shipyards and automation to streamline ship production, with a particular focus on bolstering the U.S. presence in the Asia-Pacific region.

North America Shipbuilding Market Segmentation

By Vessel Type: The North America shipbuilding market is segmented by vessel type into commercial ships, naval vessels, offshore vessels, passenger vessels, and others. Recently, naval vessels have shown a dominant market share under this segmentation, as a result of increased defense budgets and the expansion of national naval programs. The development of advanced destroyers, submarines, and aircraft carriers is a key priority for governments, ensuring the naval vessels segment remains a crucial driver of market growth.

By Propulsion Type: The shipbuilding market is further segmented by propulsion type into diesel-powered, LNG-powered, hydrogen-powered, electric/hybrid, and others. Diesel-powered vessels maintain the largest market share in this category due to their established presence in the market and the reliability of the technology. However, the trend toward alternative and cleaner fuels is gaining traction, and the market share for LNG and hydrogen-powered vessels is expected to grow as regulatory pressure mounts and companies strive for environmental compliance.

North America Shipbuilding Market Competitive Landscape

The North America Shipbuilding Market is dominated by a combination of key domestic and international players. These companies operate large-scale shipyards and have a diversified portfolio of vessels. Several market-specific factors like shipbuilding contracts, technological innovations, and the ability to secure government defense deals play a significant role in shaping the competitive environment. The competitive landscape in this market is characterized by consolidation, as a few players have significant influence due to their technological capabilities and government backing.

North America Shipbuilding Market Analysis

Growth Drivers

• Increasing Naval Defense Expenditure: In 2024, the U.S. government allocated $30 billion towards naval defense programs, significantly increasing demand for new shipbuilding projects, particularly for destroyers and submarines. This increase comes in response to rising geopolitical tensions in the Asia-Pacific region, necessitating the expansion of fleets to maintain maritime security. Canada has also earmarked $15 billion to upgrade its navy by building new frigates and Arctic patrol vessels, reflecting the broader North American trend towards defense investments in shipbuilding. The rising focus on modernizing naval fleets in both the U.S. and Canada is set to propel the shipbuilding market.
• Growth in Maritime Trade and Commercial Shipping: North American trade routes like the Panama Canal and the St. Lawrence Seaway have recorded substantial increases in cargo traffic. By 2023, over 1,000 commercial vessels passed through the Panama Canal monthly, carrying vital cargo such as crude oil, grain, and manufactured goods. This growth in regional and international trade has pushed demand for bulk carriers, container ships, and oil tankers, driving shipbuilding projects to meet the increasing transportation needs. With global supply chain recovery, North America's commercial vessel market is expected to continue its upward trajectory, driven by higher freight volumes.
• Transition to LNG-Powered Vessels: In compliance with stricter International Maritime Organization (IMO) regulations, North America is transitioning to LNG-powered vessels to reduce sulfur emissions. By 2024, over 200 LNG-powered ships were in operation within U.S. and Canadian waters, demonstrating the regions commitment to environmental sustainability in shipping. Shipbuilders are increasingly focused on constructing vessels that use cleaner fuels like LNG and hydrogen. This shift towards eco-friendly propulsion systems has resulted in a surge of orders for LNG tankers and hybrid propulsion vessels across North America, stimulating growth in the market.

Market Challenges

• High Capital Requirements for Shipbuilding: Building a commercial vessel in North America costs depending on size and complexity. These high capital costs present a significant challenge for shipbuilders, particularly smaller yards that may struggle to secure financing. Additionally, the rising costs of advanced machinery, automation systems, and materials like steel and aluminum have further increased the financial burden on shipbuilders. Without government subsidies or financial assistance, smaller shipyards may find it difficult to remain competitive in the current market environment.
• Shortage of Skilled Labor in Shipbuilding: The U.S. Bureau of Labor Statistics reported that in 2024, over 50,000 positions in the shipbuilding industry remained unfilled due to a shortage of skilled labor. The lack of qualified workers in technical roles such as welding, marine engineering, and naval architecture has slowed production and increased labor costs. The aging workforce and limited recruitment of younger workers into the shipbuilding industry have exacerbated this problem. This shortage of skilled labor is projected to persist, potentially delaying shipbuilding projects and increasing operational costs for North American shipyards.

North America Shipbuilding Market Future Outlook

Over the next five years, the North America Shipbuilding Market is expected to grow significantly due to the continuous demand for naval modernization, increasing trade volumes, and advancements in shipbuilding technologies such as automation and digitalization. Governments across the region are focusing on increasing their defense capabilities and making large-scale investments in the construction of new, advanced naval vessels. Additionally, the push for greener and more fuel-efficient vessels will continue to spur innovation within the industry, further contributing to market growth.

Market Opportunities

• Green Shipbuilding Initiatives (sustainable ship designs, hybrid propulsion systems)
  Green shipbuilding is emerging as a significant opportunity in North America, with shipbuilders increasingly focusing on eco-friendly designs and hybrid propulsion systems. By 2024, over 50 shipyards in the U.S. had adopted green practices, such as using low-emission materials and designing vessels powered by alternative fuels like LNG and hydrogen. The U.S. government has set a target to reduce carbon emissions from ships by 40% in the next decade, further driving the demand for sustainable shipbuilding. This shift is expected to generate billions in new investments aimed at developing cutting-edge, environmentally friendly vessels.
• Expansion in Offshore Wind and Renewable Energy Vessels (renewable energy projects, offshore construction demand)
  The demand for vessels supporting offshore wind and renewable energy projects is rapidly growing in North America. In 2024, the U.S. Department of Energy reported that over 30 offshore wind farms were in development, requiring specialized vessels for installation, maintenance, and support. These vessels, such as service operation vessels (SOVs) and cable-laying ships, are critical to the expansion of renewable energy infrastructure. Shipyards are capitalizing on this demand by designing and building vessels specifically for the offshore wind market, which is expected to drive growth in the shipbuilding sector.