Submarines Market - Forecast(2021 - 2026)

 Submarines Market Overview:

As stated by the International Chamber of Shipping, the international shipping industry is accountable for carrying around 90% of world trade. Also, according to NASA, 2.4 billion of global population, about 40% lodges within 100 km (60 miles) of an oceanic coast. Due to such topography, water bodies adjacent to lands have always been a subject under protection and constant surveillance by the defense sector of economies all over the globe. Consequently, naval capabilities around the globe has been pacing up with greater defense budget year on year. As submarines are significant constituent of navy fleets, authoritative in surveillance, counter-surveillance and combat, global submarines market size reached a staggering $27.2 billion in 2018. Directly influenced by socio-political friction amongst countries, submarines market is estimated to exhibit a CAGR of 3.24% during the forecast period 2019-2025. Apart from manufacturing vehicles, majority of the market players are also involved in evolving existing naval technologies of economies and add further impetus to the approach of combat. For example, Lockheed Martin Corp., is the combat system integrator for the Future Submarine Program (FSP) of Australia, that is said to be the largest defense capital investment program in Australian history. The company will collaborate with  Australian Department of Defence and Naval Group to design combat systems for the next 40 years. 

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Submarines Market Outlook:

North America is the leading region in terms of global submarines market demand with a share of 36.84% in 2018. The U.S. is reassessing it naval fleet as a reaction to China strengthening its naval forces. Both the parties involved in trade war are tightening their shipment routes in terms of security deployment as their economic interests are similar. As the U.S. Navy is permitted to operate globally and change its presence as and when required without any approval, the navy forces are often the forces to respond first to any crisis. This has led to an enormous influx of federal budget allocated towards the navy, augmenting the submarines market in North America. The FY 2019 budget for the U.S. Navy and Marine Corps team is $194.1 billion, an upsurge of 7% ($12.6 billion) from FY 2018 budget. Hence with such monetary funding in the parent sector, the market for submarines in North America is bound to flourish. The submarine programs include funding of $3.0 billion for Columbia class submarine and $7.2 billion for two Block V Virginia class fast attack submarines specifically. 

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Submarines Market Growth Drivers:

· Influx of investments into R&D by private vendors and maritime forces has propagated the development of nuclear-powered ships and submarines. This has determined the transition of submarines from sluggish submerged vessels to warships accomplished of sustaining 20-25 knots submerged for weeks on end. As nuclear power vessels can be in the sea without refueling for long periods of time, the market is growing further  with developed nations opting for nuclear-powered submarines.

·  Increasing implementation of unmanned underwater vehicles (UUVs) is significantly driving the growth in the parent market of submarines, as UUVs is a sub-segment in the market. UUVs have wide-ranging applications in naval intelligence, surveillance and reconnaissance, mine countermeasures operations, and anti-submarine warfare missions. These inexpensive vehicles are also being used privately by individuals for sea-diving and in coastal tourism services. Hence, this particular type of vehicle with naval as well as profound commercial application is a major global submarines market growth driver. 

· Economic interest and disinterests among nations involved in trade wars and cold wars is a novel growth driver of the market. For instance, the U.S. in a stare of trade war with China has offered Taiwan, which broke away in 1949 is part of Chinese mainland, the transfer of technology that will allow Taiwan to produce its own submarines. Consequently, the demand for submarines is surfacing in the developing economies as well.

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Submarines Market Recent Developments:

· General Dynamics Corp’s subsidiary, Electric Boat, in March 2019 was awarded by the U.S. Navy a contract modification of $2 billion for long lead time material for main propulsion unit and ship service turbine generator efforts, steam and electrical plant components, and miscellaneous hull, mechanical and electrical system components.  This revision fetches the overall contract value of almost $3.2 billion originally offered in 2017.

 ·  In 2018, Thales Group procured a contract of 3.5 years from the French defence procurement agency (DGA). Under this contract, Thales is to conduct a set of studies and undergo technological expansions for a sonar system to be armed on France’s future third-generation nuclear-powered ballistic missile submarine (SNLE 3G).

Submarines Market Challenges:

Life span of vehicles is a major drawback for submarines market. The average lifespan is approximately 30 to 40 years , hence the demand for newer vehicles is less compared to the demand for refurbishment and maintenance of existing fleet. However, increasing defense budgets by major economies is allowing the purchase of newer vehicles and maintenance of exiting ones as well. As majority of the market players provide maintenance services as well along with manufacturing, they are leveraging such federal funds.

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