USA Naval Vessels Market Outlook to 2028

USA Naval Vessels Market Overview

• The USA Naval Vessels market has experienced significant growth, this is reflected by North America Naval Vessels market reaching a valuation of USD 18.5 billion in 2023. This growth is fueled by increased defence spending, advancements in naval technology, and a focus on modernizing the naval fleet.
• The USA naval vessels market is consolidated, with a few major players dominating the industry. Companies such as Huntington Ingalls Industries, General Dynamics, Lockheed Martin Corporation, Northrop Grumman Corporation, and BAE Systems.
• In February 2024, the USA’s Department of Defense awarded a $36.7 million contract to Gibbs & Cox and Leidos to continue designing the new DDG(X) class destroyer.

USA Naval Vessels Current Market Analysis

• The USA naval vessels market significantly impacts national security and defense capabilities. The modernization of the naval fleet enhances the U.S. Navy's ability to project power globally, safeguard maritime interests, and respond to evolving threats.
• In 2023, the U.S. defense budget was USD 842 billion, with a significant portion allocated to naval modernization programs. The need for advanced naval platforms to address emerging threats and maintain maritime superiority is driving investments in new vessel construction and fleet upgrades.
• The state of Virginia is particularly dominating the USA naval vessels market due to its strategic location and robust shipbuilding infrastructure. Home to major shipyards such as Newport News Shipbuilding, Virginia plays a crucial role in constructing and maintaining naval vessels.

USA Naval Vessels Market Segmentation

The USA Naval Vessels market is segmented by various factors like Vessel, application, and Region.

By Vessel: The USA naval vessels market is segmented by vessel type into aircraft carriers, destroyers, submarines, and auxiliary vessels. In 2023, destroyers held the dominant market share due to their versatile capabilities and critical role in naval operations. Destroyers are equipped with advanced combat systems, missile defense capabilities, and anti-submarine warfare technologies.

By Application: The market is further segmented by application into combat operations, support operations, and training missions. In 2023, combat operations held the largest market share due to the increasing focus on enhancing combat readiness and operational capabilities. The demand for vessels capable of executing a wide range of combat missions, including power projection, deterrence, and maritime security.

By Region: The USA naval vessels market is segmented by region into North, South, East, and West. In 2023, the North region held the dominant market share due to the presence of major shipyards and naval bases. States like Virginia and Maine are key contributors to the market, with extensive shipbuilding activities and strategic importance.

USA Naval Vessels Market Competitive Landscape

• General Dynamics: In 2023, General Dynamics secured a USD 3 billion contract for the construction of a new class of nuclear-powered submarines, the Columbia-class. This contract underscores the strategic importance of underwater capabilities in modern naval warfare and highlights the U.S. Navy's commitment to maintaining a robust and capable submarine fleet.
• Lockheed Martin Corporation: In 2023, Lockheed Martin Corporation announced the successful integration of directed energy weapons on its latest class of naval vessels. This innovation marks a significant leap in naval warfare technology, providing the U.S. Navy with enhanced defensive and offensive capabilities.
• Northrop Grumman Corporation: In 2024, Northrop Grumman completed full-scale sea trials for a new large drone submarine called the "Manta Ray" that it built for the Defense Advanced Research Projects Agency (DARPA).

USA Naval Vessels Market Analysis

USA Naval Vessels Market Growth Drivers

• Increased Defense Budget Allocation: The USA naval vessels market is significantly driven by the substantial increase in defense budget allocation. In 2024, the U.S. defense budget was recorded at USD 842 billion, with a substantial portion earmarked for naval modernization programs. This budget allocation supports the procurement of advanced naval platforms, enhancing the U.S. Navy's operational capabilities and readiness to address emerging threats.
• Technological Advancements in Naval Warfare: The integration of cutting-edge technologies such as artificial intelligence (AI), advanced radar systems, and unmanned systems is a major growth driver in the USA naval vessels market. In 2024, the U.S. Navy invested USD 1.2 billion in AI-driven navigation and combat systems for new and existing vessels.
• Fleet Modernization Programs: The USA naval vessels market is fueled by comprehensive fleet modernization programs aimed at replacing aging vessels with advanced, multi-mission platforms. In 2024, the U.S. Navy allocated USD 15 billion for the construction of new destroyers and frigates under the Fleet Modernization Initiative (FMI). This program focuses on enhancing the Navy's surface combat capabilities and addressing the evolving nature of maritime threats.

USA Naval Vessels Market Challenges

• High Cost of Vessel Construction and Maintenance: In 2024, the cost of constructing a new destroyer-class vessel ranged from USD 1.5 billion to USD 2 billion. These high costs pose a financial strain on the defence budget and necessitate efficient cost management strategies to ensure the timely delivery and operational readiness of naval platforms.
• Supply Chain Disruptions: The naval vessels market is susceptible to supply chain disruptions, which can impact the timely delivery of critical components and systems. In 2024, the U.S. naval industry experienced delays in the procurement of advanced radar systems due to supply chain bottlenecks, affecting the production schedules of new vessels.
• Skilled Workforce Shortage: The shortage of skilled workforce in shipbuilding and maintenance is a significant challenge for the USA naval vessels market. In 2024, the industry reported a shortfall of approximately 5,000 skilled shipbuilders, impacting the production timelines of naval vessels.

USA Naval Vessels Market Government Initiative

• Naval Modernization Initiative (NMI): In 2024, the U.S. government launched the Naval Modernization Initiative (NMI), a comprehensive program aimed at enhancing the Navy's operational readiness and fleet capabilities. The NMI includes a budget allocation of USD 80 billion over the next five years for the procurement of new vessels and upgrades to existing platforms.
• Columbia-Class Submarine Program: The U.S. government continued its investment in the Columbia-class submarine program in 2024, allocating USD 3 billion for the construction of new nuclear-powered submarines. This program aims to replace the ageing Ohio-class submarines and enhance the U.S. Navy's underwater deterrence capabilities.
• Surface Combatant Development Program: In 2024, the U.S. government allocated USD 5 billion to the Surface Combatant Development Program, focusing on the development and procurement of next-generation destroyers and frigates. This program emphasizes the integration of advanced combat systems, missile defence capabilities, and multi-mission functionalities.

USA Naval Vessels Future Market Outlook

The USA naval vessels market is anticipated to witness remarkable growth driven by expansion of fleet size, integration of artificial intelligence (AI) and autonomous systems, and focus on cybersecurity and electronic warfare.

Future Market Trends

• Expansion of Fleet Size: Over the next five years, the USA naval vessels market will witness a significant expansion in fleet size, driven by the U.S. Navy's strategic objective to achieve a 355-ship fleet by 2030. This expansion will involve the procurement of new destroyers, frigates, submarines, and auxiliary vessels to enhance the Navy's operational capabilities and global presence.
• Integration of Artificial Intelligence (AI) and Autonomous Systems: The future of the USA naval vessels market will be shaped by the integration of artificial intelligence (AI) and autonomous systems. By 2028, the U.S. Navy plans to deploy AI-driven combat systems, unmanned surface vessels (USVs), and autonomous underwater vehicles (AUVs) to enhance situational awareness, decision-making, and operational efficiency.