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The global connected ships market size was valued at USD 5.79 billion in 2022 and is projected to grow from USD 6.22 billion in 2023 to USD 10.09 billion by 2030, exhibiting a CAGR of 7.1% during the forecast period.
Connected ships are used in the marine and maritime industries to increase safety and navigation by combining connected technology. The application of connected technology on ships or vessels includes the improved management of critical ship operations, ship condition monitoring for preventive maintenance, and ship traffic management, among others. With the rise of industrial internet, the integration of automation and Big Data has touched every aspect of shipping.
Connected ship is a model where ships are tracked and managed with the help of satellites. This provides more streamlined reporting and helps improve the efficiency of ship operations, including fuel management. Sensor technologies and monitoring tools would alert both offshore and onshore management teams of potential problems and use predictive energy models to enable data-driven decision-making.
COVID-19 Pandemic Negatively Impacted Shipbuilding as well as Shipping Industries in Light of Imposed Restrictions
The shutdown caused by the COVID-19 pandemic in the first two quarters of 2020 resulted in lower revenues in the shipping sector. Shipyards, shipbuilding companies, and other vendors had to adjust their operations to the restrictions set by the government, which caused the suspension of shipbuilding activities.
Furthermore, the weakening of demand for shipping business and tourism led to the cancellation of new ship orders, which directly affected the related shipping market. In addition, due to decrease in passenger traffic during the pandemic, cruise ships were anchored. In some cases, this led to delays in cruise deliveries and cancellations of orders. As a result, the decline in demand for new ships and the drop in production activity negatively affected the market growth. However, the crisis helped drive digitalization, which is set to create growth opportunities in the coming years.
Russia and Ukraine War Disrupted the Shipping Industry's Supply Chain Leading to Higher Freight Rates and Container Shortages
The conflict between Russia and Ukraine is affecting the global logistics market at every level. The impact of the pandemic on storage capacity and container availability was only beginning to fade when the war between Russia and Ukraine began to affect the industry. The war disrupted the flow of goods, increasing costs and product shortages, resulting in devastating food shortages across the globe.
Russia destroyed Ukraine's agricultural infrastructure and disrupted entire supply chains. The Black and Azov Seas were blocked by Russia, and Ukrainian grain shipments were hijacked in the first months of the offensive. However, in July 2023, Russia and Ukraine signed a UN agreement to unblock Ukrainian grain exports from three Black Sea ports and ease the shortage. Despite the agreement, hours after signing the agreement, Russia attacked the port of Odessa with cruise missiles. This created high uncertainty in supply chains across the globe.
The war closed several ports and raised sea freight costs. Ships had to be diverted, causing congestion and delays in cargo flows, exacerbating conditions in the global supply chains. In addition, sanctions and restrictions encouraged a shift from rail to sea shipments, increasing pressure and exacerbating container shortages.
Increasing Technological Developments in Vessel Monitoring Systems is a Leading Industry Trend
The shipbuilding industry is rapidly moving toward digitization. Growing shipping has led to the development of networked shipping solutions such as cargo tracking systems, ship-tracking systems to ensure the safety and efficiency of business. Cargo monitoring systems allow data reading and alarm monitoring of cargo tank pressure, temperature, and other parameters. Many companies are investing in the development of satellite-based monitoring systems.
The VMS component cost will vary depending on the functionality needs of the system being deployed. In general, the more functionality, the higher the cost of equipment and the higher the data link cost (airtime cost). Therefore, the VMS system cost will vary and the amount of government support will vary depending on national and regional needs.
For instance, in the EU and the U.S., VMS systems will require expensive on-board equipment and a large amount of data over satellite link, which will lead to higher airtime charges. However, they will also provide very high functionality. In other regions, where per vessel costs are high and large fleet sizes are a problem, communication technologies such as AIS are deployed which significantly reduced the equipment and airtime costs while providing acceptable basic functionality of the VMS system.
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Growing Demand for Smooth Traffic on Congested Sea Lanes to Drive the Market Growth
Growing international trade is expected to be a major growth driver for the intermodal transportation market. Growing maritime transport is expected to cause traffic congestion on sea lanes. According to the United Nations Conference on Trade and Development (UNCTAD), up to 80% of world trade takes place by sea in various seaports.
Therefore, there is a growing demand for efficient management of port traffic and traffic congestion in major channels. The rapidly growing maritime trade and transportation has increased the demand for ship traffic management and real-time navigation systems, which are expected to drive the connected ships market growth.
Shipping Companies’ Increasing Investment for Digitalization of their Vessel to Fuel Market Growth
Carriers are investing heavily in ship digitization with a rise in the situational awareness of fleet owners. Combined ship took control of shipping. Connected vessels provide remote access to container/cargo monitoring systems that can reduce the damage claims for charterers. This reduces the insurance costs of the vessel. In addition, combined ship technology can offer significant cost improvements in operational capability and ship maintenance. As a result, shipping companies are investing in digitalization precisely due to the aforementioned benefits.
Digitalization should be seen as a transformation in the delivery of business through the introduction of Industry 4.0 technologies such as Artificial Intelligence (AI), Business Domain Awareness (BDA), Consumer Condition Control (CC), the Internet of Things (IoT), Digital Security, Augmented Reality/Virtual Reality (AR/VR), Advanced Robotics, Augmented Managed (AM) and Advanced Simulation. These big players have embraced digitization to improve their competitiveness and reduce costs by optimizing assets and meeting customer needs, a prime example being container tracking.
Vulnerability to Cyberattacks and High Cost of Digitalization to Hamper Market Growth
The large initial investment required to digitize ships is expected to dampen the growth of this market. In addition, the incorporation of telecommunications technology into maritime systems leads to a number of cyber-attacks. Ships can be vulnerable to cyber-attacks and cause severe losses that will hinder market growth.
Navigation is one of the key components that can be accessed. The hacker can send false navigational information to the ship’s crew, see the vessel sailing off course, or send false information regarding the position of the ship to shore-side teams. Monitoring and control systems can also be accessed. Today’s interconnected systems can be accessed from systems such as the water treatment system or the engine management system.
Commercial Segment to Witness Highest CAGR over the Forecast Period Owing to Rising Demand for Commercial Fleet
Based on ship type, the market is segmented into commercial and defense.
The commercial segment is expected to witness the fastest CAGR during the forecast period. Increasing demand for commercial fleet for transport or import-export of goods, including electronic devices, FMCG products, automobiles, and others is expected to boost the segment growth over the forecast period. Moreover, the additional benefit of reduced transportation time by identifying the shortest route via a connected network is expected to increase the demand for connected ships in the commercial sector.
The defense segment is anticipated to witness significant growth throughout the forecast period. This is due to increasing investment by governments in connected ships to improve navy strength.
On-board Segment to Dominate the Market Owing to Increase in Monitoring & Controlling of On-board Operations
Based on installation type, the market is classified into on-board and onshore.
The on-board segment dominated the market in 2022 and is expected to continue leading the market during the forecast period. Ships are mainly utilized to carry out onboard operations, which involve monitoring and controlling the function of an ongoing ship. Most of the functions performed by connected ships are on board and include monitoring and control of ongoing functions as the ship moves.
The onshore segment is expected to grow at a substantial rate over the study period. This is owing to the rising use of connected ships data to track traffic status and management of port activities. Fleets benefit from connected ships as they allow for better communication with onshore and reliable information on safe and cost-effective sea routes, resulting in efficient fleet health monitoring.
Line Fit Segment to Hold the Highest Market Share due to Increasing New Ship Orders
Based on fit, the market is classified into line fit and retrofit.
The line fit segment held the highest market share in 2022 and is predicted to continue its dominance throughout the projection period. This is owing to the growing investment in naval defense and surge in seaborne trade activities across the globe. In addition, an increase in new ship orders is predicted to propel the growth of the segment.
For instance, in June 2023, a shipbuilding contract en bloc for five 15,500 TEU Dual Fuel Container Vessels (LNG) was signed between the Korean shipbuilding company, Yang Ming Marine Transport Corporation (Yang Ming), and Hong Kong-based heavy equipment manufacturer, Hyundai Heavy Industries CO., Ltd.
The retrofit segment is expected to showcase significant growth over the study period. This is owing to the ship modernization programs by naval forces and by commercial fleet operators of various countries.
Vessel Traffic Management to Hold the Largest Revenue Due to Increasing Demand for Safety and Efficient Navigation
Based on application, the market is classified into fleet operations, vessel traffic management, and fleet health monitoring.
The vessel traffic management segment held the largest market share in 2022. Growing demand for maritime safety, efficient navigation, and other life safety features at sea is driving the segment growth. Moreover, the use of vessel traffic management systems in seaports for efficiently handling large volumes of containers is expected to fuel segment growth.
The fleet health monitoring segment is anticipated to grow at the highest CAGR during the forecast period. This is due to the growing demand for preventive maintenance and predictive diagnostics of vessels across the globe.
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By region, the global market is segmented into North America, Europe, Asia Pacific and the rest of the world.
Asia Pacific Connected Ships Market Size, 2022 (USD Billion)
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Asia Pacific held a dominant connected ships market share in 2022 and is expected to grow at a remarkable CAGR during the forecast period. Growing traffic between developing Asia Pacific countries such as China, South Korea, and other ports is driving the growth of the market. The development of new ports in Indonesia, Hong Kong, and the rest of Asia Pacific is expected to create new opportunities for market expansion in the region. In addition, improving trade relations and increasing imports and exports are expected to increase the demand for ships in the region.
Europe will witness significant growth during the forecast period due to increasing demand for autonomous and connected ships and cruises in France, the U.K., and others. Additionally, the presence of major shipbuilding companies in France, Italy, Germany, and others is expected to contribute to the market growth in the region.
The growth of the North America market is accelerated by rising ICT developments in the North American maritime sector and the presence of major players in the region. In addition, the market is further influenced by the increasing budgets of shipping companies for digitization of ships. Additionally, increasing maritime tourism and maritime traffic in the region is expected to drive the market growth in the coming years.
Wartsila Focuses on Developing Innovative Technology to Maintain its Leading Position
Wartsila is a major player in the connected shipping market. The company offers a propulsion control system designed for technologically advanced naval and military vessels. Other major players such as Northrop Grumman, General Electric, Kongsberg Gruppen, Marlink, and Schneider Electric are investing in the research and development of connected ships with the adoption of artificial intelligence, augmented reality, and the Internet of Things.
An Infographic Representation of Connected Ships Market
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The connected ships market research report provides a detailed analysis of the industry and focuses on key aspects such as key players, vessel types, facility, connected vessel suitability, and applications. Furthermore, the report provides information on related shipping market industry trends, costs of marine broadband connectivity, drivers, restraints, competitive landscape, market competition, product pricing, fleet operators, market status, budgets of shipping companies for digitalization of vessels, and highlights key industry developments. Apart from the factors mentioned above, it includes several direct and indirect factors that have influenced the global market growth in recent years.
ATTRIBUTE | DETAILS |
Study Period | 2019-2030 |
Base Year | 2022 |
Estimated Year | 2023 |
Forecast Period | 2023-2030 |
Historical Period | 2019-2021 |
Growth Rate | CAGR of 7.1% (2023-2030) |
Unit | Value (USD Billion) |
| By Ship Type, Installation Type, Fit, Application, and Geography |
By Ship Type
| |
| By Installation Type
|
| By Fit
|
Segmentation | By Application
|
| By Geography
|
Fortune Business Insights says that the global market size was USD 5.79 billion in 2022 and is projected to reach USD 10.09 billion by 2030.
Registering a CAGR of 7.1%, the market will exhibit steady growth over the forecast period (2023-2030).
Based on ship type, the commercial segment is expected to lead this market during the forecast period.
Wartsila Oyj is the leading player in the global market.
In terms of share, Asia Pacific dominated the market in 2022.
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