The OECD has published an analysis of China’s dominance in the global shipbuilding market, and the findings reveal a structural gap that has steadily widened over the past two decades.
While shipbuilding industries in OECD countries have experienced a sharp decline in market share, China has consolidated its dominant position across all market segments.
The Decline of OECD Shipbuilders
The European Union’s share of global deliveries, measured in compensated gross tonnage (CGT), fell from over 20% in 2000 to about 10% by 2007 and has since dropped to 4-5%, with widespread shipyard closures in Germany, the United Kingdom, and the Nordic countries.
In Japan, production has been concentrated in fewer shipbuilders, with sector employment falling from approximately 250,000 in the 1980s to around 71,000 in 2024.
South Korea, the largest shipbuilding economy in the OECD and second-largest globally, has faced recurring financial crises among its three major shipbuilders, leading to periodic restructuring and layoffs.
In the United States, the number of active commercial shipyards has declined by over 70% since 1975, with a loss of more than 70,000 jobs.
China’s Price Advantage
An analysis of 1,777 vessel orders placed between January 2020 and December 2024 reveals a persistent price differential in favor of Chinese-built ships across all market segments:
- Mid-size container ships (7-9,000 TEU): Chinese prices are nearly 10% lower
- Large product tankers (110-120,000 dwt): the gap widens to approximately 14%
- LNG carriers (high-value segment): average price advantage of about 5%
Labor Costs – The Decisive Factor
Average manufacturing earnings in China are more than three times lower than in South Korea and nearly twice as low as in Japan. Although this gap has narrowed significantly since the early 2000s, when Chinese labor costs were roughly 20 times lower, it continues to exert competitive pressure on OECD shipbuilding economies.
Notably, a recent analysis found that Chinese wages across all personnel categories are 10-15% lower even compared to Romania, highlighting the competitive pressure felt by Romanian shipyards as well.
Substantial government support and low labor costs remain the twin pillars of China’s advantage, and the trend shows no signs of reversing in the near term.
Source: OECD analysis, via Gelu Stan