Market Range Of $10 To $16.4 Billion For Ocean Ships And Subsystems In 1976-1985
United States spending for ocean ships and their subsystems during 1976-1985 could range from $10 billion to $16.4 billion, depending on the U.S. commitment and world demand, according to "Shipbuilding and Associated Subsystems," a Frost & Sullivan analysis of the industry. Aggregate demand for world shipping capacity, minus existing capacity, and the U.S. Government's willingness to press a cargo-preference policy for American shipping are the critical factors in determining the eventual size of the market.
Assumptions Scenarios A, B and C were formulated to project the extent of the total market and sub-markets, based on funding levels for (a) Construction Differential Subsidy; (b) cargo preference legislation, and (c) Navy shipbuilding dictated by national defense needs.
Scenario A calculates an increase of 46 percent or 268 ships, representing total new ship construction of $10.1 billion for 1976- 85. Scenario B sees an even larger expansion of 408 new breakbulk and bulk carriers, or outlays of $13.6 billion, and Scenario C is the optimum market of 563 new ships or a total market of $16.4 billion.
The study believes that Congress will enact cargo-preference legislation in 1977, mandating, among other items, the carrying of 20 to 30 percent of U.S. oil imports in American-built and operated tankers.
Some of the study's other assumptions are: • World trade will continue to grow at 5 to 10 percent annually, probably closer to the higher figure.
• The world economy will remain relatively stable.
• Continued growth in construction of LNG carriers, intermodal and other specialty vessels. • Despite long-term U.S. Government policy, there will be a strong trend toward bilateral agreements and cargo preference restrictions, forcing a reexamination of U.S. policy.
Breakbulk Shipping In breakbulk shipping, the largest dollar market under Scenario A will be the construction of 36 barge carriers for a total of $3.6 billion in 1976-85. There will be more (42) roll-on/roll-off carriers built, but the market value will be $3.1 billion.
Also in breakbulk, new containership construction is estimated to be $1.5 billion for Scenario A, and general freighter expenditures of $1.3 billion will be concentrated in the 1981-85 period.
Under Scenarios B and C, the barge carrier category will remain at $3.6 billion, ro/ros also will stay constant, but container carrier shipbuilding will expand to $2.5 billion for option B, and $3.5 billion for C.
Bulk Carriers In bulk-carrier shipping, liquefied natural gas (LNG) carriers will dominate all Scenarios, ranging from $10.8 billion in new construction under A, to nearly $14 billion for the C option. In vessels, the span is 48 to 90.
In other bulk-carriers, oil tankers, given optimum conditions, could rise from new construction of $562.5 million in Scenario A to $8.2 billion under Scenario C. New tanker construction would range from 237 to 320. Dry cargo carrier estimates are, variously, $2.0 billion, $2.5 billion and $3.0 billion, all in 1981-85.
Subsystems In the subsystems markets, steel will be the primary segment, with carbon steel plates alone requiring purchasing of $1.2 billion in Scenario A, $1.7 billion in B, and almost $2 billion in the C option. Other carbon steel requirements, including structural, will add substantially to this submarket. Alloy steel, aluminum sheet, plate and foil, and copper pipe and tubing present smaller but significant markets of opportunity. Purchasing of diesel engines, including semi-diesel, is forecast to be $252 million, $340.4 million and $408.5 million under the respective scenarios. Gasoline engines and carburetors will be a minuscule market in comparison. In communication and navigation systems, the Marisat communication system will be the major recipient, with estimated funding ranging from $21.4 million to a high of $45.0 million. Satellite, Omega/Decca and Loran navigation systems are expected to be $10.2 million, $15.5 million and $21.6 million under each scenario.
Conclusions Among a number of conclusions, "Shipbuilding and Associated Subsystems" believes that U.S. shipyards will build an increasingly higher proportion of the 50 to 100 LNG carriers required in 1976-80 because of advancements in cryogenic technology, considerable unused U.S.
shipyard capacity versus lesser foreign capacity, and economic trends favoring the U.S.
For further information, contact Customer Service, Frost & Sullivan, Inc., 106 Fulton Street, New York, N.Y. 10038, Reference Report #405.