Global shipbuilding demand is likely to remain resilient for the long-term, with increasing geopolitical conflict and uncertainty one of the primary drivers. The 2026 war between Iran, the United States and Israel has caused a spike in demand for alternative suppliers and routes, leading Fitch Rating to revise sectoral outlook to “neutral” from “deteriorating.” According to the non-profit Container Trades Statistics, global container volumes reached 16.2 million 20-foot-equivalent units (mTEUs) in April — the first full month of data since the Strait of Hormuz closures triggered by February’s Persian Gulf crisis — marking a 4 percent year-over-year increase and a 1.6 percent rise over March. Year-to-date volumes are also running 5 percent ahead of 2025 levels.
Shipping sector analysts also predicted that the market had become oversaturated with vessel capacity and fewer orders would be placed to shipbuilders in 2026 and 2027. However, geopolitical disruptions are one major reason why orders have remained strong. Shocks such as Red Sea attacks, the Russia-Ukraine war, the Panama Canal drought, the Baltimore bridge collapse, and now the Iran-Israel-US conflict have demonstrated the importance of excess capacity. Carriers can more easily navigate these conflicts with a large and diverse fleet, resulting in expansive orderbooks that are now treated as insurance rather than oversupply.
These trends are good news to the world’s leading shipbuilding nations, which are highly concentrated in East Asia, particularly China. However, in the current geopolitical climate, there are significant opportunities for Southeast Asian nations to scale up their shipbuilding industries and take advantage of the sustained demand for global trade.
Southeast Asian nations are taking the initiative to capture greater shipbuilding market share through structured international partnerships. At the OECD-Southeast Asia Policy Roundtable on Shipbuilding, Steel, and AI held in Tokyo in February 2026, Indonesia, Vietnam, and Thailand agreed to a regional peer review of their shipbuilding sectors with the OECD, covering priorities such as workforce skills, technical capabilities, supply chain dependencies, energy-efficient ships, and leveling the competitive playing field. The Philippines separately agreed to follow up on implementation pathways for OECD peer review recommendations, while all four countries were invited to join the OECD’s shipbuilding committee meeting in Paris in April.
The collaboration under the auspices of the OECD builds on existing foundations: Vietnam’s industry began in 1996 through a Hyundai joint venture and has since grown into the world’s fifth-largest shipbuilder, while Indonesia has expanded capacity to large tankers partly through policies allowing full foreign ownership of shipyards—illustrating how foreign investment and technology transfer remain central to the region’s growth strategy.
Philippines President Ferdinand Marcos Jr. has made deepening shipbuilding ties with Japan a centerpiece of his economic strategy, securing fresh investment from Tsuneishi Group following his state visit to Tokyo. On June 3, Marcos ordered a 64-hectare expansion of the West Cebu Industrial Park bringing the special economic zone to over 600 hectares and supporting Tsuneishi’s plans for expanded shipyard facilities and green maritime manufacturing. Industry analysts say this Japan-anchored momentum, combined with the Philippines’ skilled workforce and geography, could position the country among the world’s top five shipbuilders while signaling to other global investors that the sector offers a stable, well-supported environment for scaling returns.
As Southeast Asian nations seek to develop shipbuilding hubs within their borders, investors can benefit by helping regional governments meet their objectives, exploiting niche market segments, aligning with regulatory mandates and mitigating global supply chain disruptions.
The multi-purpose vessels market, valued at roughly $160.8 billion in 2025 and growing at a steady 1.8 percent CAGR through 2033, offers Southeast Asian shipyards a natural market niche to exploit. Demand for these smaller and more adaptable vessels is increasingly driven by escalating maritime security concerns, including conflict and waterway blockages, as well as piracy, illegal fishing, and territorial disputes. These challenges necessitate versatile, reconfigurable platforms over single-mission vessels, trends that play to the strengths of developing shipbuilding nations rather than requiring the scale of ultra-large container ships or very large crude carriers (VLCCs). Asia-Pacific already holds the largest regional share of multi-purpose vessels and is expected to be the fastest-growing market, fueled by coast guard expansion and offshore energy support needs. Vietnam, Indonesia, and the Philippines with their extensive coastlines, increasingly technical workforces, and Japanese and Korean investment partnerships are well positioned to specialize in smaller patrol boats and transport craft.
Asian shipyards of the future will also need to transition away from fossil fuels as they face regulatory pressure to meet carbon emissions targets and supply shocks such as ongoing conflict in the Strait of Hormuz. International Maritime Organization (IMO) targets call for cutting emissions at least 20 percent by 2030, accelerating investment in vessels powered by green ammonia, methanol, hydrogen, and biofuels. Meanwhile, the disruption of Middle East crude flows have pushed prices from roughly $72 to over $100 per barrel, exposing Asia-Pacific’s vulnerability to oil shocks and spurred a regional pivot toward domestically produced alternative fuels. Indonesia’s move to a 50 percent palm oil biodiesel blend (B50) and Malaysia’s parallel push toward higher palm-based blends signal that alternative fuel feedstocks are becoming more available and economically competitive across Southeast Asia. The momentum towards alternative energy supplies gives Southeast Asian shipyards a unique opportunity to capitalize on growing biofuel infrastructure already being built for transport and energy needs, positioning the sector to construct next-generation vessels powered by locally sourced green fuels.
Of course, shipbuilding investment in Southeast Asia also carries significant risks. While the region is looking towards alternative fuel sources, there is no single clear source that will overtake petroleum and become the new industry standard. Today’s design decisions must be locked in before tomorrow’s regulatory and fuel standards are settled, with some owners questioning whether entire vessel segments will remain viable decades out. Compounding this, Southeast Asian governments must navigate a strategic balancing act: leveraging East Asian capital and technological expertise from China, Japan, and South Korea offers a fast path to building up high-quality shipyards, but over-reliance on these partners risks a failure to transfer technology domestically, leaving the region without the policy environment and supporting economy needed to cultivate an indigenous shipbuilding sector that global investors can confidently put capital into. Finally, shipbuilding’s multi-year lead times mean vessels ordered today must anticipate market and geopolitical conditions years away, a difficult proposition given how quickly tariff regimes, sanctions, and trade routes have shifted recently. Even a pivot to multi-purpose vessels may not be able to foresee the logistical needs of the next decade’s geopolitical upheavals. For Southeast Asian shipbuilders without the scale, financing cushions or indigenous supporting industries of the major players, this combination of fuel uncertainty, dependency risk, and long build cycles makes future-proofing investments especially precarious.
Confronting these compounding risks will require rigorous geopolitical analysis and early identification of strategic signposts — including shifts in trade policy, sanctions regimes, fuel infrastructure investment, and procurement trends — that allow shipbuilders to adapt construction plans and technology roadmaps before market conditions force their hand. For Southeast Asian shipyards operating with thinner margins and less institutional depth than their East Asian counterparts, this kind of forward intelligence is a prerequisite for construction of fleets that can navigate increasingly complex geopolitical situations on the high seas.
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