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 […]
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
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.