Shipbuilding and repair

The fleet flagged under Member States accounts for approximately 12% of the global fleet, with 15 096 vessels registered as of the second quarter of 2024. In terms of gross tonnage, the EU fleet constitutes over 14% of the global fleet, amounting to 236.3 million gross tonnes, while it represents approximately 13% of deadweight tonnage, totalling 298.8 million tonnes.

As of the second quarter of 2024, the fleet registered to Member States included a diverse range of vessel types, both in absolute numbers and percentage. It accounted for nearly 27% of the global roll-on/roll-off passenger fleet (transport of passengers and vehicles, 912 ships), almost 23% of the world’s passenger vessels (1 226) and more than 18% of the global containership fleet. In absolute terms, the most prevalent ship type was fishing vessels (2 540), followed by tugs/dredgers (2 007) and general cargo ships (1 468).

The EU’s shipbuilding industry comprises approximately 150 major shipyards engaged in the construction of various types of vessels, both civilian and naval, along with platforms and other maritime equipment. According to the European Maritime Safety Agency (EMSA), in 2023 around 1 in 11 ships was built in an EU shipyard, with the majority consisting of tugs/dredgers (38), fishing vessels (29), general cargo ships (29), and passenger ships (26).

In 2023, a total of 437 ships were recycled worldwide. Among them, 22 were dismantled at EU ship recycling facilities, while four EU-flagged vessels were scrapped outside the EU.

For the purposes of this Report, the Shipbuilding and repair sector includes the following sub-sectors:

• Shipbuilding: building of ships and floating structures, building of pleasure and sporting boats, and repair and maintenance of ships and boats;
• Equipment and machinery: manufacture of cordage, rope, twine and netting; manufacture of textiles other than apparel; manufacture of sports goods; manufacture of engines and turbines (except aircraft); and manufacture of instruments for measuring, testing and navigation.

Size of the EU Shipbuilding and repair sector

The sector generated a gross value added (GVA) of EUR 19.9 billion in 2022, a 7%-increase compared with 2021 (Figure 33). Gross profit, at EUR 5.2 billion increased by 14% on the previous year. The turnover reported for 2022 was EUR 70.7 billion, a 5%-increase on the previous year.

In 2022, about 316 000 people were directly employed in the sector (2%-increase on 2021), and the annual average wage was estimated at EUR 46 400, up 3% compared with 2021.

Estimates for 2023 indicate increases in GVA, gross profit and turnover of between 8% and 10%. In addition, the increase in persons employed and average remuneration is estimated to be between 3% and 5%.

Figure 33 Size of the EU shipbuilding and repair sector, 2009–2023: turnover, GVA and gross operating surplus (billion EUR); people employed (thousands); and average wage (thousand EUR)

Results by sub-sector and Member State

France leads employment within the Shipbuilding and repair sector, accounting for 18% of jobs, followed by Italy and Germany (15% and 14%, respectively). In terms of GVA, France generates 26% of Member States’ GVA in the sector, followed by Italy (19%) and Germany (17%).

Figure 34 Share of employment and GVA in EU Shipbuilding and repair sector, 2022

Shipbuilding generated about 85% of jobs and about 79% of the sector’s GVA; while equipment and machinery generated the remaining 15% of jobs and 21% of GVA.

Trends and drivers

The European shipbuilding industry experienced a surge in 2023, with a total of 101 new orders being placed at European shipyards. This represents a 9%-increase on the previous year, driven primarily by a surge in demand for dry cargo vessels, which accounted for 71 of the new orders, and cruise ships, for which 11 new orders were recorded. This growth is second to Chinese orders (+29% on a year-on-year basis), which confirms its position as the top shipbuilding nation globally. Other major shipbuilding countries continue to experience a decline in new orders: South Korea recorded a decline of 19%, and Japan a staggering 31%, while their respective market shares declined by 4.1% and 6.9%.

Italy accounted for the highest number of orders in 2023, with more than 2.7 million gross tonnes (a total of 351 ships), followed by France, with 1.6 million gross tonnes (a total of10 ships). This is mainly due to Fincantieri (Italy), which is the largest builder of cruise ships in the world, with 30 ships on order – roughly 45% of the global cruise ship orderbook – and to Chantiers de l’Atlantique, which has 10 cruise ships on order.

Some factors currently influencing the Shipbuilding and repair sector are also expected to have a significant impact on it in the near future. The geopolitical instability, resulting from Russia’s war of aggression against Ukraine, has affected the shipbuilding industry. Uncertainties surrounding shipping routes in the region have led some companies to postpone long-term investment decisions. The geopolitical instability has led the European Commission to publish the joint white paper ‘European defence – Readiness 2030’, which is likely to have a positive impact on the shipbuilding industry. Finally, the roadmap to a greener industry affects shipbuilding and the retrofitting of ships, but also the disposal of ships at end of their life.

Naval defence ship orders

The joint white paper ‘European defence – Readiness 2030’ calls for “a massive increase in European defence spending” to support the development of a stronger, more resilient industrial basis for defence and an ecosystem of technological innovation for the defence industries. The document identifies seven priority areas of capability, including some with relevance to the Blue Economy, such as an EU-wide network of seaports that facilitates the seamless and fast transport of troops and military equipment across the EU and partner countries (i.e. military mobility), and strategic enablers and critical infrastructure protection in the maritime domain.

In 2024, total defence spending by Member States is expected to exceed EUR 326 billion, marking an increase of more than 30% compared with 2021, and reaching a record 1.9% of EU GDP. Between 2021 and 2027, real-term growth is projected to surpass EUR 100 billion, exceeding previous estimates. Investments in research, development, and the procurement of new defence capabilities were also predicted to rise significantly between 2021 and 2024, from approximately EUR 59 billion to EUR 102 billion.

The naval sector plays a crucial role in EU defence capabilities, offering a wide array of vessels, from aircraft carriers to nuclear submarines. The EU naval vessels market is highly consolidated, with leading companies such as Navantia SA SME., the Naval Group, Fincantieri SpA, ThyssenKrupp AG, SAAB Kockums, Damen Naval, and Naval Vessels Lürssen dominating the industry. These key players have joined forces as part of the SEA Defence project, aimed at preserving the competitiveness of the European naval industry by focusing on the use of emerging technologies to enhance naval capabilities and increasing operability among European navies.

In 2023, members of the Aerospace, Security, and Defence Industries Association of Europe reported that the naval sector accounted for EUR 37.9 billion of the revenue, representing 24% of total European defence expenditure. This marks a 17.7% increase compared with 2022. Similar estimates are reported by Mordor Intelligence, which estimates the value of the European naval vessels market to be EUR 36 billion in 2025, and projects an increase to EUR 58 billion by 2030, with a compound annual growth rate of 10.21%.

The increase in defence spending, aligned with the joint white paper ‘European defence – Readiness 2030’, is expected to drive the sector’s growth in the medium to long term.

Green shipbuilding and recycling

Developing zero-emission vessels requires a life-cycle approach to assess key environmental impacts across all stages, including design, construction, operation, and disposal. Shipyards, as industrial production facilities, rely on materials and energy-intensive processes such as cutting, bending, welding, sandblasting, painting, and coating. These processes are complex and contribute significantly to environmental and climate impacts. The shipbuilding industry is responsible for approximately 4-8% of the total CO₂ emissions of diesel-powered ships throughout their life cycle, and accounts for 29% of carbon monoxide emissions. In addition, the industry generates volatile organic compounds, which contribute to the formation of tropospheric ozone, posing risks to both human health and the environment.

The Energy Efficiency Design Index and the Carbon Intensity Indicator of the International Maritime Organisation (IMO) are pushing shipbuilders to create more energy-efficient vessels that meet strict emissions targets.

Finally, responsible recycling at the end of a ship’s life is essential. Between 1 January 2019 and 31 December 2021, Member States and Norway reported a total of 90 ships receiving a ready-for-recycling certificate, confirming they met the environmental and safety standards for dismantling and recycling in EU-approved yards. Of these, 41 vessels completed the recycling process – which took place in seven facilities – with Türkiye handling the largest share (50%). In 2022, vessels flagged under Member States represented 13.2% of the global fleet, but only 7% of end-of-life vessels recycled were flagged under a Member State at the time of recycling. This indicates that the goal of ensuring safe and environmentally sound recycling, as outlined by EU legislation, is still challenged by the practice of re-flagging.

Retrofitting for the Energy Transition

Retrofitting has gained strategic and economic importance as a key solution for transforming high-emission ships into climate-friendly vessels, ensuring compliance with international and EU environmental regulations.

Retrofitting solutions – such as exhaust gas cleaning systems (scrubbers), alternative fuel systems (for LNG, hydrogen, and ammonia), and energy efficiency enhancements (air lubrication systems, hull coatings) – can significantly lower emissions and ensure compliance with the IMO’s 2020 sulphur cap and the Carbon Intensity Indicator requirements. Beyond compliance, these technologies also improve fuel efficiency, reduce operational costs, and enhance the competitiveness of shipping companies.

Among all retrofit options, the most impactful in terms of both shipyard and GHG emissions is the installation of a new engine and fuel system capable of running on alternative fuels like methanol, ammonia, or hydrogen. However, engine replacement is a technically complex process requiring skilled labour, specialised facilities, and significant investments. It also involves integrating new fuel systems and tanks, which can be challenging and costly depending on the fuel type. As an alternative, ships can be supplemented with battery systems to reduce diesel dependency. Other retrofitting measures include expanding shore power capabilities to reduce emissions while at berth and exploring wind-assisted propulsion to cut fuel consumption.