Japan is weighing bold steps to rejuvenate its once-dominant shipbuilding industry, including the establishment of a government-backed national shipyard, as part of a wider strategy to restore maritime manufacturing capabilities critical to national security.
The proposal, submitted to prime minister Shigeru Ishiba by the ruling Liberal Democratic Party (LDP) on Friday, calls for the rehabilitation of dormant shipbuilding and repair facilities, alongside incentives for public and private investment in next-generation shipyard infrastructure.
Japan once commanded nearly 50% of global shipbuilding output during the 1990s. Today, its market share has plummeted to around 10%, trailing far behind China, which controls 70% of global newbuild capacity and an astounding 90% of repair capacity, and South Korea, its long-time regional rival.
The sharp decline has been fuelled by fierce pricing competition, with Chinese and Korean yards benefiting from extensive state subsidies and scale advantages. The most recent blow came in May, when new ship orders at Japanese yards fell 48% year-on-year to just 884,100 gt, according to figures released this week by the Japan Ship Exporters Association (JSEA).
Amid the slump, Japan’s shipbuilding sector received a jolt of fresh leadership. Yukito Higaki, president of Imabari Shipbuilding—the country’s largest shipyard—was appointed this week as the new chairman of the Japan Shipbuilding Industry Association (JSIA), becoming the first leader from a dedicated commercial yard rather than a diversified heavy industry firm like Mitsubishi or IHI.
At a press conference, Higaki outlined an ambitious target: regaining at least 20% global market share by 2030, doubling current levels.
“To become a price leader who has the power to control pricing, we must at least achieve a 20% global market share by 2030,” said the Imabari boss.
Higaki also expressed openness to cooperation with the US, especially under the Trump administration’s push to revive American shipbuilding.
Tokyo and Washington are preparing to launch a Japan-US Shipbuilding Revitalization Fund, designed to channel investment into both domestic and US-based yards. Japanese firms are eyeing contracts to build car carriers, LNG carriers, and ice-class naval vessels for the US market, potentially positioning themselves as strategic alternatives to Chinese suppliers.
Discussions have included naval collaboration, icebreaker production, and the establishment of a bilateral maritime supply chain decoupled from China. The US is also expected to raise port fees on Chinese-linked tonnage calling at American ports later this year, part of a broader effort to curtail China’s maritime dominance.
Japan’s revitalisation plan will be underpinned by the 2022 Economic Security Promotion Act, which enables the government to directly support industries deemed vital to national interest.
Yet time may be running out. According to Danish Ship Finance, unless Japanese shipyards win a substantial wave of new orders, average utilisation rates could plummet from 50% this year to just 20% by 2027. This looming drop threatens not only industrial output, but the retention of skilled workers.
“Yards in Japan may find themselves underutilised, pointing to a mismatch between output capacity and commercial competitiveness,” Danish Ship Finance warned in a report issued last month.
