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Marine internal combustion engine

COVID-19 Impact Analysis: What’s next for the Marine Internal Combustion Engine Market?

The client, an OEM in the US, partnered with Infiniti Research to enhance their efforts in capitalizing on the most lucrative market opportunities. Through the engagement, the client wanted to assess the global marine internal combustion engine market and identify the key market dynamics, including the significant growth drivers and critical technology trends, and the size and growth potential of different segments. As the COVID-19 outbreak impacted business outcomes to companies across the globe, the client also wanted to understand the level of impact of the pandemic on their business and analyze how key market competitors were adapting to and strategizing to overcome these new roadblocks. A detailed market segmentation study on the global marine internal combustion engine market was undertaken by our industry experts, with the exclusion of market segments including outboard engines or engines with a displacement of fewer than 5 liters and engines with less power than 2500kW. Through this engagement, the client was provided with a detailed report on the impact of COVID-19 on their business, market challenges to overcome, competitor strategies, and key recommendations to adapt to the ‘new normal.

Scope of the engagement

In a span of four weeks, experts at Infiniti Research undertook an incisive study of the global marine internal combustion engine market, covering:

  • Demand and Supply of Fleet
  • Market size and segmentation of marine internal combustion engine: By engine type      
  • Market segmentation by significant manufacturers: marine internal combustion engine market
  • Segmentation by Major Countries: Marine Internal Combustion Engine
  • Impact of COVID-19, market drivers, market challenges, technology trends

Research methodology

Infiniti proposed a unique blend of rigorous secondary research and in-depth primary interviews to develop a complete understanding of the global marine internal combustion engine market. The primary research comprised of telephonic discussions and interviews using an unstructured questionnaire with 45 seasoned respondents holding strategic decision-making positions or extensive industry expertise. The respondent selection process was based on parameters to procure insights on the market, competitive and end-user levels. Research experts at Infiniti also conducted rigorous secondary market research or desk research through classified data sources and platforms. Infiniti’s industry experts also conducted a detailed market sizing study on the marine internal combustion engine market to determine the total new building orders received and deliveries made between 2017 to 2019 and estimated the same for 2020 based on market trends and inputs from key thought leaders.

Want comprehensive insights into the market sizing study undertaken by Infiniti Research for the client? Request a free proposal.

Impact of COVID-19 on Marine and Shipbuilding Industry

Like most industries, marine and shipbuilding industries’ growth and performance have also taken a hit from the ongoing COVID-19 crisis. The pandemic has resulted in the stagnation of the marine and shipbuilding industries, which in turn has negatively impacted the demand for marine IC engines and the components used to build these engines. To help the client better understand the overall effect on their business and the industry as a whole, experts at Infiniti provided them with an analysis of the impact of COVID-19 on different industry segments.

Impact on the marine industry

With leading economies such as the US, China, and Italy, among some of the worst affected nations due to the coronavirus outbreak, there has been a ripple effect disrupting businesses globally. As a result of COVID-19, Industries across China faced severe production loss in the first quarter of 2020. Supplies from several industries were negatively impacted, with pharmaceutical APIs and intermediates, heavy equipment, retail products, and electronics being the most affected. The reduction in shipment from Chinese industries is expected to lead to a 75% decline in shipping volumes for 2020. The coronavirus outbreak has also had a negative impact on the demand for oil tankers. With the global crude oil industry already facing an oversupply situation, further reduction in crude oil demand due to COVID 19 has worsened the situation.

Impact on shipbuilding

Shipbuilding activities have also been adversely affected due to the pandemic. The slump in oil demand has led to the cancellation of over 50% of new orders at an overall container level and more than 80% at an oil tanker level for 2020. Moreover, supply chain disruptions have affected shipbuilding activities. With businesses stagnating and supply chains being restricted, shipyards face difficulties in functioning effectively to handle existing orders (several shipyards in China have issued force majeure declarations to extend delivery deadlines). Shipping lines and freight forwarders are running short of yard space due to the growing fleet of non-operational vessels. They are canceling already placed orders or delaying delivery dates to 2021.

Impact on marine engines and components

Due to the slowdown in shipbuilding activities and force majeure declarations by shipyards, the marine engine, and components market is expected to face a slowdown. With new building activities being put on hold and the majority of current orders to be fulfilled in 2021, engines that are already manufactured will incur higher storage and warehousing costs for manufacturers. This would impact manufacturers’ profitability. The slowdown also casts doubts on the number of shipbuilding orders that could be received once the COVID-19 situation normalizes. Therefore, future demand for marine engines and components is expected to stagnate, at least for the short-term, in the foreseeable future.

Market Challenges for Marine Internal Combustion Engine OEMs Due to COVID-19

Supply chain disruptions and business loss

Reduced demand from end-markets due to nationwide lockdowns and business shutdown post-COVID-19 has negatively impacted OEMs’ supply chain activities, even forcing some to suspend manufacturing operations temporarily. Even some of the industry’s big names are shutting down their manufacturing facilities as they expect a significant decline in the marine and energy businesses over the next few months.

Disruptions in the marine industry leading to declining shipbuilding activities

The global shipping industry has been severely impacted by COVID 19. The pandemic has led to more than a 60% decline in 2020 orders, with a significantly negative impact on oil tanker demand. With China being the origin of the outbreak, industries in the country were the first to be affected globally. Supplies from several industries were negatively impacted, with pharmaceutical APIs and intermediates, heavy equipment, retail products, and electronics being the most affected. The reduction in shipment from Chinese industries is expected to lead to a 75% decline in shipping volumes for 2020. Furthermore, with shipping lines and freight forwarders running short of yard space due to the growing fleet of non-operational vessels, new orders are expected to be negligible, and already placed orders are expected to be canceled or postponed to the next year.

For more detailed insights into the challenges and strategies to overcome come, connect with an industry expert.

shipbuilding company

Competitive benchmarking for a U.S. Shipbuilding Company Helps Improve Productivity By 31%

The U.S. shipbuilding industry is known to be one of the finest producers of both military and commercial fleet. However, the rising costs continue to erode the budgets and overall profitability of shipbuilding companies in the US. According to experts at Infiniti Research, some of the key causes of the rising costs include material and schedule delays, starting production with immature designs, inexperienced labor force, and reduced productivity due to the introduction of a new series of a given combatant. Other roadblocks to growth faced by players in the U.S. shipbuilding industry involve factors such as unstable and declining build rate, lack of appropriate competitive benchmarking, and suboptimal acquisition strategies. While companies are taking measures to address these U.S. shipbuilding industry challenges, the inefficiencies in tackling costs continue to plague the industry’s overall growth.

Top markets (by global market share): South Korea, China, and Japan

RFP for more insights on top segments, market opportunities, and growth strategies in the U.S. shipbuilding industry.

Business challenge

A U.S. shipbuilding company, engaged in building and repairing vessels of assorted sizes and utility, approached experts at Infiniti Research to undertake a competitive benchmarking study in an effort to understand how key players in the shipbuilding industry performed and tackled business challenges. Apart from this they also sought strategies to address other business challenges including:

  • The shipbuilding company noted a decline in productivity when compared to other international shipyards, with outputs tailing by at least 40% in comparison
  • Tackling cost growth by identifying the key cost drivers and taking corrective measures
  • Assess the U.S. private shipyards using a standardized benchmarking system
  • Improving operating margins which was found to be much higher compared to international commercial shipyard companies
  • Enhancing obsolete designs that do not adhere to the quality standards
  • Identifying DoD, Navy, and industry actions, policies, and contract incentives that can be implemented

Facing similar challenges in your business? Get into dialogue with an expert from Infiniti Research to learn how we can help your business with tailor-made solutions.

Our Approach

Experts at Infiniti Research undertook a comprehensive competitive benchmarking study with exhaustive secondary research from proprietary and open source information sources to develop insights and hypotheses specific to the U.S. shipbuilding industry. Rigorous desk research through 750+ sources was executed to understand the U.S. shipbuilding market landscape, competitor strategies, and market trends.

 As a part of the engagement, in-depth market research was undertaken where our experts assessed ten leading international shipyards and the seven major U.S. shipyards to understand their key product lines and compare the shipbuilding practices in the international markets with that of the client. The market data collected was also validated with market experts and independent consultants in the shipbuilding sector. An Industry best practice assessment also identified key strategies and best practices followed by international shipbuilding companies to reduce costs and enhance productivity. This enabled us to help the shipbuilding company benchmark their exiting processes with that of key players in the market and identify the critical gaps. With Infiniti’s market opportunity analysis, the U.S. shipbuilding company was able to analyze various growth opportunities.

Results Achieved

shipbuilding industryInfiniti’s engagement helped the shipbuilding company implement strategies to enhance their overall productivity. Within a span of 7 months, the client recorded a 31% increase in their productivity. The benchmarking analysis also helped the client understand how they compared to top performing shipbuilding companies and replicated their cost-cutting strategies into the business. The shipbuilding company also identified the right suppliers to procure good quality materials at reasonable prices, bringing down the overall cost of production. Additionally, the shipbuilding company was also able to:

  • Improve their operating margins by 10% in each quarter
  • Revamp design implementation strategies by understanding the changing market requirements and discarding the obsolete segments
  • Identify unmet market needs and key growth segments before their competitors, giving them a first-mover advantage in the market

Shipbuilding industry

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