A recent Goldman Sachs analysis indicates that the global shipbuilding sector is entering a multi-year upgrade cycle, with Chinese shipyards positioned to play a pivotal role in this transformation.

Goldman Sachs' September 2 research forecasts that driven by environmental regulations, fleet aging, and trade expansion, the global shipbuilding industry is embarking on a "multi-phase, long-term upward cycle" that could extend through 2032, generating approximately $1.2 trillion in new vessel orders. Chinese shipyards are expected to lead global capacity growth during this expansion phase.

The firm maintains an optimistic outlook on the shipbuilding industry's long-term upward trajectory, identifying environmental compliance requirements and aging fleet replacement needs as fundamental long-term growth catalysts.

**Decarbonization and Fleet Renewal: Primary Order Drivers**

Analysts project that between 2025 and 2032, global new ship orders will total 441 million compensated gross tons (CGT), valued at $1.2 trillion.

Decarbonization regulations will account for 26% of demand, fleet replacement needs will represent 48%, while trade growth will contribute 26%. The analysis emphasizes that decarbonization and replacement requirements will sustain the upward cycle through continued new ship orders, particularly beyond 2029, when vessels delivered between 2009-2012 will exceed 20 years of age and require replacement with more environmentally compliant ships.

**Environmental Regulations (26%):** Increasingly stringent decarbonization regulations serve as a core driver for new orders. The analysis indicates that by 2035, operational costs for conventional fuel vessels will exceed those using alternative fuels such as liquefied natural gas (LNG) and methanol, due to rising carbon emission penalties. To achieve compliance targets, alternative fuel vessels must comprise 50% of the fleet by 2035.

**Fleet Replacement (48%):** This represents the largest demand source in the current cycle. The substantial number of vessels delivered during the previous shipbuilding peak (2009-2012) will approach 20 years of age around 2029, entering a major replacement phase. Replacement demand is particularly pronounced for tankers, bulk carriers, and gas carriers.

**Trade Growth (26%):** Steady global trade expansion continues providing fundamental support for new ship orders.

**Chinese Dominance in Capacity Expansion**

Goldman Sachs anticipates that new shipbuilding prices will remain elevated during 2025-2028, despite potential decline of 12% from 2024 peaks, primarily due to capacity discipline and structurally stronger new order demand. The analysis emphasizes that global capacity expansion is predominantly driven by Chinese shipyards, while South Korean and Japanese yards maintain relatively conservative expansion levels.

Goldman Sachs' bottom-up analysis of over 400 global shipyards' schedules, historical delivery data, and announced capacity expansion plans reveals that while deliveries are expected to increase from 41 million CGT in 2024 to 52 million CGT in 2027 (27% growth), global shipyard compound annual growth rate (CAGR) will only reach 2% during 2025-2027.

This growth is primarily driven by Chinese shipyard expansion (new facilities and reactivated legacy yards). China's share of global shipbuilding capacity continues increasing, with efficient construction capabilities and cost advantages serving as significant factors attracting new orders.

**Opportunities and Challenges for Chinese Shipbuilding**

The analysis specifically examines the impact of increased US port service fees for Chinese-built vessels on China's shipbuilding industry, concluding the negative effects are limited.

Two key data points support this assessment: first, Chinese-built or operated vessels represent only 4% of the international fleet calling at US ports; second, US import-export trade volumes account for merely 12% of global maritime trade. This provides shipowners sufficient flexibility to redeploy Chinese-built vessels to alternative routes.

The analysis notes that Chinese shipyards' market share decline in 2025 stems primarily from capacity constraints rather than geopolitical factors—order backlogs extend 3.7 years, significantly exceeding South Korea and Japan's 3-year levels. This has prompted some urgent buyers to turn to alternative yards.

However, this situation presents long-term opportunities for Chinese shipyards. As Chinese yards expand capacity and deliver existing orders, their attractive pricing advantages will become more prominent, facilitating market share recovery. Data suggests this trend may have begun, with Chinese shipyards' new order market share rebounding to 69% in June and July 2025, substantially higher than the 49% achieved in the preceding five months.