125-126 / 207
125
Industry Overview
MARINE
The marine industry is a dynamic and vibrant marketplace where commerce, passengers, oil & gas, and defense converge in a single global ocean. Today 90% of
the world’s goods are transported over water. Yet uncertainty can dramatically impact the industry without warning, challenging even the most seasoned operators.
Increasing environmental restrictions are also challenging the industry across all segments. For example, requirements to use low sulfur fuels are expected to
cost the industry $50B a year if they go in effect in 2020. Shippers may also be charged a carbon tax. As the marine industry faces ever more stringent cost
competitiveness, vessels need to perform efficiently with reduced fuel consumption, emissions and maintenance levels.
GE powers, propels, positions and predicts the marine industry
GLOBAL ORDER BOOK BY VESSEL TYPE
90% 4X
7%
OF THE WORLD’S GOODS ARE
TRANSPORTED OVER WATER
TRANSITION TO GAS IS
GROWING AT A PACE 4X THE
RATE OF OIL
ESTIMATED AVERAGE
DOWNTIME ON DRILL
SHIPS IS 7%
FACTS & FIGURES
Passenger
Offshore
Tankers
Bulk carriers
Gas
Containerships
Other cargo
2%
19%
19%
39%
8%
9%
4%
126
Developments in Marine
A CYCLICAL INDUSTRY IN A VOLATILE WORLD
Offshore
Offshore oil & gas operators face their own unique challenges. At $50 per barrel, only ~20% of fields are viable and many big investment decisions, especially
by IOCs, are being delayed. At the same time, energy demand is still growing and many governments have high GDP dependence in offshore oil production. As
exploration moves into deeper and more hazardous environments, operators require sophisticated equipment that enables and provides efficient, safe and
cost effective operations. An over-supply still remains on oil rigs today, so fleet re-deployment will be largely focused on revenue-generating floating production
storage and offloading going forward. Regional growth is shifting from Latin America to Asia, especially China, as government investment has increased in
high-tech “white list” yards.
Merchant
Reducing equipment footprint and weight is key for commercial vessels, while low vibration and noise are primary goals for passenger vessel solutions.
Demand for import and export of goods has constrained the shipping market, but environmental regulations and increase in passenger traffic are both driving
developments and growth in this sector. China cruise passenger growth is expected to grow by 3x by 2020, prompting investment. Incremental regulations are
in place for emissions and energy efficiency. China is capping sulphur emissions in key ports in preparation for its 2020 global limit, which will drive demand for
LNG-capable vessels and hybrids.
Naval
As the world faces tight economic conditions, many government budgets are constrained. As a result, there has been a trend of naval platform restructuring
over the past few years. Targets to reduce total cost of ownership have caused investment to be placed on customized platforms for future capability needs.
Defense systems are large power consumers that must be able to complete a mission. Keeping a low profile that holds up under fire is a must for naval vessels.
Increased power with low noise signatures and high shock resistance are central naval needs. A shift to smaller vessels, more suited to act as a hybrid and
energy efficient solution has occurred. The range of high-tension regions in today’s geo-political climate require flexible, multi-role vessels.
TOTAL SHIPBUILDING INVESTMENT CYCLES PRELIMINARY 2016 EXPLORATION &
PRODUCTION SPENDING DOWN ~25%
6,000
5,000
4,000
3,000
2,000
1,000
0
% 40
30
20
10
0
-10
-20
-30
2001
2003
2005
2007
2009
2008
2009
2010
2011
2012
2013
2014
2015[e]
2016[e]
2011
2013
2015
2017
2019
2021
2023
Total shipbuilding
investment cycles
Preliminary 2016 E&P
spending down ~25%
Led to ~50% ‘14-’15 drop
in project investment
$136B
‘13
History
Forecast
Historical average
$135B
‘25e
$59B
‘16e