Potentials of a $400 Billion Small Ships’ Market for Bangladesh

shipbuilding industry of Bangladesh

The shipbuilding industry of Bangladesh has a long string of history attached to it. However, the global financial crisis in 2007-08, combined with the industry’s inability to ensure quality and timely delivery, led to degrowth. According to EPB, for the fiscal year 2021, ship exporters collected only $ 0.2 million, a small amount compared to the global shipbuilding sector’s market size valued at $1,600 billion. Regardless, Bangladesh has climbed up 13 ranks to 14th in the shipbuilding industry within five years, as stated in a report by UNCTAD. About 100 shipbuilding yards exist in the current market, serving a market worth an estimated $341 million.

This activity in the industry is credited to the need for vessels to accommodate 90% of the $100 billion international trade that takes place through waterways. Trade accompanied by local investment from major industrial groups such as; Meghna Group, City Group, and Delta Shipyard has enabled the industry to float through weak demands to reach its potential. Since 2008 Meghna group has built 110 ships, investing an amount of $80-91 million and employing about 1,200 people. City Group has built around 60 to 65 ships and invested about $227 million, employing about 4500 people.

The resilience of the industry players rose from the need to provide means of transportation through the waterways to facilitate trade. The industrial groups invested in the value chain to satisfy this need of the local market and claimed to be sufficient enough to export. The keenness of investors despite sluggish business arises from the disinterest of market leaders in producing small-sized ships of less than 25,000 deadweight tonnage (DWT), a segment where Bangladesh has the opportunity to earn $4 billion by just grabbing 1% of the market. As a result, the industry is expected to outperform the current slug, especially in light of government contracts in setting up a shipbuilding facility at Payra Seaport, summing up to $1.58 billion.

 

Source: The Daily Star

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