The European naval vessels market is expected to exhibit a CAGR of 3.5% during the forecast period (2020 - 2025).
- The market is propelled by recent developments of frigates and offshore patrol vessels, owing to their lethality, speed, and maneuverability. The incidents, such as the rise in illegal trespassing of immigrants and drug trafficking in countries, such as Italy, Spain, and Albania, have led to the rise in demand for naval vessel developments in this region.
- Other factors, such as the implementation of the United Nations Convention on the Law of the Sea (UNCLOS) III norms, need to patrol Exclusive Economic Zones that stretch up to 200 miles beyond national coastlines, and need for cost-effective naval forces after cold war era are propelling the market's growth in the region.
- The advanced technological developments, such as initiatives to deploy Aegis technology equipped ships in the European naval fleet and investments in robotics and other digital technology development by local naval ship builders are supporting the growth of the naval vessels market in Europe.
Key Market Trends
Increased Investment and Joint Collaboration Programs are Propelling the Market Growth
The European naval shipbuilding companies are developing advanced vessel designs that have witnessed a huge demand from foreign countries such as the United States. Italy's Fincantieri developed a frigate in collaboration with France for the national navies of Italy, France, Egypt, etc. and in April 2020, it bagged an order of USD 795 million to develop first of ten guided-missile FFG (X) frigate for the United States Navy. In April 2020, Spain joined the European Patrol Corvette program aimed at developing corvettes that can serve the missions performed by off-shore patrol boats and light frigates. The 3300 tons frigates, being developed by Naviris, a joint venture between France's Naval Group and Italy's Fincantieri, were initially proposed to serve naval security forces of France, Greece, and Italy but now after the entry of Spain, support from Navantia is expected to increase in the program. Russia is also investing in modernization of the existing fleet and has achieved significant developments in sound suppression technology for submarines. All these factors are propelling the market growth for naval vessels in the European region.
Russia to Exhibit Significant Growth During the Forecast Period
Russia emerged as a major military power after the Soviet era and has significantly increased its spending on naval forces to protect its maritime interests around the globe. In 2019, Russian naval forces added 23 new vessels to their fleet which is 3 less than the 26 vessels added in 2018 but the rate of fleet expansion is more compared to the US and China. In May 2020, Russia ordered 6 Karakurt Class advanced corvettes for its Baltic fleet. Russia is also making investments in missile warships and its Irkutsk class of submarine fleet is undergoing up-gradation to house hypersonic Zicron missiles to counter threats posed by aircraft carriers, destroyers, etc. Such developments will propel the naval vessels market in Russia during the forecast period.
The Europe naval vessels market is consolidated with players, such as Naval Group, FINCANTIERI, thyssenkrupp, and BAE Systems, are dominating the market. The key players in the market own several shipbuilding yards dedicated to naval vessel developments. The prominent revenue generation strategy of key players is by winning contracts and orders from European and foreign governments. The market is witnessing a significant growth owing to the increased collaborations and partnerships between different market players.
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