Naval Vessels and Surface Combatants Market

Growing maritime security challenges is driving the market growth

For instance, in 2023, armed robberies and pirate attacks against ships in the Straits of Malacca and Singapore increased, with 72 reported cases recorded, up from 70 in 2021, according to a report by the International Maritime Organization (IMO), a UN specialized agency with headquarters in the UK that oversees shipping. Remarkably, attacking a moving ship within these waters accounted for around 81% of the occurrences reported in 2022. Thus, the market for surface combatants and naval vessels is expanding as a result of growing challenges to maritime security.

The market for surface combatants and naval vessels is anticipated to increase at a rapid pace in the future due to the growing maritime traffic. The exchange of products, commodities, and services via shipping and navigation on seas, oceans, and other waterways is referred to as maritime trade. By offering security, defending shipping lanes, and guaranteeing the protection of priceless cargo, naval ships and surface combatants support maritime trade and enable secure, continuous international trade.

For instance, in September 2023, the intergovernmental United Nations Conference on Trade and Development, with its headquarters in Switzerland, predicted that marine trade would increase by 2.4% in 2023 and by more than 2% between 2024 and 2028. As a result, the market for surface combatants and naval vessels is being driven by the growth in maritime trade.

Modern naval ships are equipped with cutting-edge technology for effective and safe marine operations. The industry is growing due to the advent of next-generation technology including integrated electric propulsion, ships powered by solar and wind energy, and more buckypaper. Moreover, robotic technologies are used in about 67% of their industrial operations. The shipbuilding industry's production pace is improved by the increasing usage of robotics. Robots used in shipbuilding perform heavy lifting, welding, blasting, painting, and other operations in shipyards. In addition, rising technological advancements in the maritime propulsion system by major companies and developing nations portend further market expansion.

For instance, in May 2023, the Research and Innovation Agency (DARPA) of the U.S. Department of Defense announced a 42-month program to develop an underwater propellant system using Magnetohydrodynamic Kinetic (MHD) drive, which uses electric current and magnets to propel boats and ships silently. The MHD drive system has no moving parts. Thus, driving the naval vessels and surface combatants market revenue.

Geopolitical tensions are a significant driver of the Global Naval Vessels and Surface Combatants Market Industry. Regional conflicts and territorial disputes prompt nations to bolster their naval forces, leading to increased procurement of surface combatants. For instance, the South China Sea disputes have led to heightened naval activities among regional powers, resulting in substantial investments in naval capabilities. This environment of uncertainty compels countries to enhance their maritime defense strategies, thereby fueling market growth. As nations respond to these challenges, the market is poised for expansion, with projections indicating a potential market value of 856.7 USD Billion by 2035.

The Global Naval Vessels and Surface Combatants Market Industry is projected to experience substantial growth in the coming years. With a market value of 476.9 USD Billion in 2024, the industry is expected to expand at a CAGR of 5.47% from 2025 to 2035. By 2035, the market could reach an estimated value of 856.7 USD Billion. This growth trajectory is driven by increasing defense budgets, technological advancements, and heightened geopolitical tensions. The demand for advanced naval vessels is likely to remain strong as nations prioritize maritime security and modernization efforts, indicating a robust future for the naval defense sector.

The focus on maritime security is increasingly influencing the Global Naval Vessels and Surface Combatants Market Industry. As piracy, smuggling, and illegal fishing pose threats to national interests, countries are investing in naval assets to safeguard their waters. The rise in maritime security concerns is prompting governments to enhance their naval capabilities, leading to a growing demand for surface combatants. This trend is particularly evident in regions like the Gulf of Aden, where naval forces are deployed to combat piracy. Consequently, the market is expected to reach 476.9 USD Billion in 2024, with continued growth anticipated as nations prioritize maritime security initiatives.

The Global Naval Vessels and Surface Combatants Market Industry is experiencing a surge in defense budgets across various nations. Countries are prioritizing naval capabilities to enhance maritime security and assert their presence in international waters. For instance, nations like India and China are significantly increasing their naval expenditures, contributing to the market's growth. In 2024, the market is projected to reach 476.9 USD Billion, reflecting a robust demand for advanced naval vessels. This trend is likely to continue as geopolitical tensions rise, prompting further investments in naval defense systems, which could lead to an estimated market value of 856.7 USD Billion by 2035.

Technological advancements play a pivotal role in shaping the Global Naval Vessels and Surface Combatants Market Industry. Innovations in stealth technology, automation, and weapon systems are enhancing the capabilities of naval vessels. For example, the integration of artificial intelligence and unmanned systems is revolutionizing naval operations, allowing for more efficient surveillance and combat strategies. As nations seek to modernize their fleets, the demand for technologically advanced vessels is expected to rise. This trend is likely to drive the market's growth at a CAGR of 5.47% from 2025 to 2035, as countries invest in next-generation naval platforms to maintain strategic advantages.

Environmental regulations and sustainability considerations are emerging as critical factors in the Global Naval Vessels and Surface Combatants Market Industry. As nations strive to meet international environmental standards, there is a growing emphasis on developing eco-friendly naval vessels. This includes the adoption of alternative fuels and energy-efficient technologies. For instance, several navies are exploring hybrid propulsion systems to reduce their carbon footprint. Such initiatives not only align with global sustainability goals but also drive innovation within the naval sector. As a result, the market is likely to witness a shift towards greener technologies, influencing procurement decisions and shaping future naval capabilities.

By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The North American naval vessels and surface combatants market area will dominate this market. The biggest spending on the acquisition of naval vessels and the bolstering of naval forces is responsible for the region's explosive expansion. The U.S. Navy and Huntington Ingalls Industries inked a contract in April 2021 for the purchase of the amphibious assault ship LHA 9. The deal was valued USD 107 million.

Furthermore, Austal USA was given a contract by the United States Navy in July 2022 to build two towing, salvage, and rescue ships.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 2: NAVAL VESSELS AND SURFACE COMBATANTS MARKET SHARE BY REGION 2022 (USD Billion)

Source Secondary Research, Primary Research, Market Research Future Database and Analyst Review

Europe naval vessels and surface combatants market accounts for the second-largest market share. Growing private company investments in Europe are expected to support the expansion of the market for surface fighters and naval vessels. The market is growing due to the existence of significant important players like Thales Group, BAE Systems plc, Naval Group, and others. Furthermore, the ongoing hostilities between Russia and Ukraine will present more chances for naval troops operating in the area.

Further, the German naval vessels and surface combatants market held the largest market share, and the UK naval vessels and surface combatants market was the fastest growing market in the European region.

The Asia-Pacific Naval Vessels and Surface Combatants Market is expected to grow at the fastest CAGR from 2023 to 2032 as a result of rising defense spending from South Korea, China, India, and other countries. For instance, China and Pakistan reached an agreement in February 2021 to purchase four Type 054A/P ships, F-22P frigates, Hangor-class submarines, and other armaments. The expansion of the Asia Pacific market is also linked to nations like India placing more emphasis on acquiring various navy vessels for maritime uses.

Moreover, China’s naval vessels and surface combatants market held the largest market share, and the Indian naval vessels and surface combatants market was the fastest growing market in the Asia-Pacific region.

Leading market players are investing heavily in research and development in order to expand their product lines, which will help the naval vessels and surface combatants market, grow even more. Market participants are also undertaking a variety of strategic activities to expand their footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, naval vessels and surface combatants industry must offer cost-effective items.

Manufacturing locally to minimize operational costs is one of the key business tactics used by manufacturers in the naval vessels and surface combatants industry to benefit clients and increase the market sector. In recent years, the naval vessels and surface combatants industry has offered some of the most significant advantages to medicine. Major players in the naval vessels and surface combatants market are attempting to increase market demand by investing in research and development operations includes BAE Systems (U.K.), Mazagon Dock Shipbuilders Limited (India), Larsen & Toubro Ltd. (India), Garden Reach Shipbuilders and Engineers (GRSE) (India), Hyundai Heavy Industries Co.

Ltd. (HHI) (South Korea), Navantia (Spain), FINCANTIERI S.p.A. - Via Genova (Italy), ThyssenKrupp Marine Systems (Germany), General Dynamics Corp NASSCO (U.S.), and Damen Shipyards Group (Netherlands).

L&T is a conglomerate in the industrial sector. The business provides a broad range of goods and services for different market niches. For its clients, it provides engineering, production, construction, and technology. It provides hydrocarbon, shipbuilding, hydraulics, machinery for rubber processing, and valves. Along with goods for energy distribution and management, the company also manufactures and distributes equipment for mining and construction. In addition, it offers financial services linked to infrastructure finance, general insurance, agricultural finance, wholesale finance, and housing finance, among other things.

A holding firm, HD Hyundai Co Ltd (HD Hyundai) was formerly known as Hyundai Heavy Industries Holdings Co Ltd. Through its subsidiaries, it offers services to the energy and heavy industry sectors. The company operates in the petrochemical, shipbuilding, offshore engineering, refinery, and smart energy management industries. HD Hyundai offers maritime solutions, including as offshore plants, ship lifecycle maintenance, and propulsion systems for ships. The corporation has operations in Europe, Asia, North America, and Korea. The head office of HD Hyundai is located in Daegu, Yeongnam, South Korea.