A closer look at the massive Chinese orderbook amid US probe

The US Trade Representative, Katherine Tai, launched a probe in April 2024 under Section 301 of the Trade Act of 1974, which allows the US to address unreasonable or discriminatory acts, policies or practices that burden or restrict US commerce.

The official report, published on 16 January, highlighted “China has targeted the maritime, logistics and shipbuilding sectors for dominance and has employed increasingly aggressive and specific targets in pursuing dominance.” It further stated, China’s targeting of these sectors for dominance “is enabled by policies that unfairly depress costs or provide advantages.”

According to the findings, China’s share of the global shipbuilding market surged from less than 5% of global tonnage in 1999 to over 50% in 2023. Additionally, China’s ownership of the global commercial fleet reached over 19% as of January 2024.

The investigation concluded that China’s actions in targeting these sectors for dominance are both “unreasonable" and “burdensome or restrictive to US commerce.”

The probe was initiated in response to a March 2024 petition by five US labour unions, which urged an inquiry into China’s policies aimed at dominating the maritime, logistics and shipbuilding industries. The unions proposed imposing port fees on Chinese-built vessels, a suggestion that has faced resistance from the international shipping community.

Although the investigation does not recommend specific penalties, it determines the results “provide a basis for finding that responsive action is appropriate”.

China’s response

On 17 January, the Chinese Ministry of Commerce criticised the US action, describing it as unilateral and protectionist, driven by domestic political considerations and aimed at stifling China’s growth.

A Ministry spokesperson, quoted in Chinese media, stated the decline of the US shipbuilding industry’s share predated the rise of China’s shipbuilding sector and is unrelated to its current prominence.

The China Association of the National Shipbuilding Industry also issued a statement condemning the investigation as “irresponsible,” labelling its conclusions as “baseless attacks and malicious smears against China’s shipbuilding industry.”

China’s massive orderbook.

Following the official results of the US investigation, Riviera takes a deep dive into the orderbook of Chinese shipyards.

Data from Xclusiv Shipbrokers, shared with Riviera, reveals Chinese shipyards are currently building 2,527 vessels. The largest segment consists of 935 bulk carriers, followed by 771 tankers. Chinese builders are also constructing 586 container vessels, 133 LPG carriers and 102 LNG carriers.

Focusing on bulk carriers, Chinese shipyards have an orderbook for 332 Ultramaxes, 296 Kamsarmaxes and 124 Handysize vessels, among other sizes. In the tanker sector, they are building 193 MR2 vessels, 177 Aframax/LRs, 65 VLCCs and 51 Suezmaxes.

Notably, China has significantly increased its presence in the container vessel market in recent years, securing numerous orders for mega ships. The numbers support this trend: the Chinese orderbook includes 175 ultra large container ships, 147 neo-Panamax ships, and 70 very large container ships.

Additionally, Riviera reported that China overtook South Korea in 2024 in one of its dominant sectors – the LPG carrier market. According to Xclusiv Shipbrokers, Chinese shipyards are currently constructing 68 very large gas carriers and 34 medium gas carriers. China has also made strides in the LNG carrier sector, building 65 vessels with capacities ranging from 141,000 to 200,000 m³, along with 24 even larger vessels.

In its annual review, shipbroker Clarksons reported China’s shipbuilding production increased by 18% year-on-year in 2024, capturing 53% of the global market share by compensated gross tonnage. South Korean shipyards experienced a 22% increase in orders, securing a 28% market share, while Japanese builders saw a 3% decline in orders, holding a 12% share.

"China took over two-thirds of all contracts by tonnage and achieved market-leading positions in all main sectors, except gas," Clarksons noted.