The Global vessel retrofit market was valued at USD 5,268.4 million in 2020. Demand for vessel retrofit witnessed a year on year growth of 4.1% in the year 2024 and is anticipated to reach USD 6,521.5 million in 2025. Over the assessment period (2024 to 2034), the vessel retrofit is projected to expand at a CAGR of 5.0% and attain value of USD 10,168.7 million by end of 2034.
Vessel retrofit refers to the process of upgrading or modifying existing ships with new technologies, equipment, or systems to improve fuel efficiency, reduce emissions, enhance performance, or comply with evolving environmental regulations.
Retrofitting costs ten times lesser than to build a new vessel with similar technologies, allowing fleet owners to upgrade the existing ships to remain competitive. The retrofitting process often includes the installation of energy-efficient systems, such as air lubrication or optimized propellers, which reduce fuel consumption and low down operating cost.
Retrofitting enables the integration of alternative fuel systems, like LNG, hydrogen, or ammonia, helping ships comply with new emission regulations. This also enhances a vessel's performance, reliability, and lifespan, making it a suitable option for modernizing fleets.
| Attributes | Key Insights |
|---|---|
| Estimated Value, 2024 | USD 6,226.2 million |
| Projected Size, 2034 | USD 10,168.7 million |
| Value CAGR (2024 to 2034) | 5.0% |
Vessel retrofitting focuses on installing advanced systems like LNG fuel systems, scrubbers, and energy-efficient technologies to meet IMO regulations. It enhances fuel efficiency, reduces emissions, and modernizes aging fleets.
Key retrofits include alternative fuel systems, air lubrication, and carbon capture solutions, ensuring compliance with global environmental standards while minimizing operational costs and extending vessel lifespans.
One of the key segment in retrofit type is alternative fuel retrofits dominate the retrofit type. It allow ships to use cleaner fuels like LNG, hydrogen, or ammonia, and reduce harmful emissions. This not only helps vessels meet strict environmental rules but also saves money on fuel and operating costs.
These retrofits improve fuel efficiency and extend the life of older ships, making them more sustainable and cost-effective as compared to buying new ships.
Commercial vessels dominate the vessel retrofit market due to the large-scale operations and high fuel consumption. These vessels, such as cargo ships and tankers, face strict environmental regulations and rising fuel costs, making retrofitting an attractive solution.
Retrofitting enhances fuel efficiency, reduces emissions, and ensures compliance with regulations.
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Emphasis on carbon reduction and stringent emission regulation to fuel up the vessel retrofitting.
Increasing regulations on emissions control by the International Maritime Organization, sulfur cap and carbon reduction targets, is helping in the growth of the vessel retrofit. IMO 2020 mandates that ships must limit sulfur emissions to 0.5% globally, a significant reduction from the previous 3.5% Sulphur emission.
This regulation is helping the ship manufacturers to retrofit their vessels with equipment like scrubbers and low Sulphur fuel system, to show its promising results. Adding on the new technology into their vessel, will help in serving the multiple need of the vessel.
These organization has fixed targets for reducing greenhouse gas emissions by 50% till 2050.The stringent requirements has help vessel owners to improvise their ships to stay compliant. The failure to follow the regulation could lead to hefty fines, restricted access to certain ports, or impacting the competitive edge.
The European Union's EU Monitoring, Reporting, and Verification Regulation and the USA EPA's Vessel General Permit are emphasizing the need for vessels to meet specific emissions standards, thus encouraging retrofitting in the ships or vessels.
These regulatory pressures ensure that vessel retrofitting becomes not just a choice but a necessity for ship-owners aiming to meet compliance standards. This would further benefit in increasing the operational lifespan of ship by 8-10 years thus benefiting the ship owners with more profitable outcomes.
Energy-efficient retrofits cut fuel costs, reduce emissions, and enhance vessel performance.
The energy efficient systems are retrofitted in vessels in helping to reduce fuel consumption and lowering operational costs for vessels. By including energy saving devices, air lubrication and undergoing hull modifications, vessel operators can make use of fuel efficiently.
These retrofits improve hydrodynamic performance and optimize engine performance. For instance, installing energy-saving devices like propeller boss cap fins helps modernize propulsion. At the same time, air lubrication systems create a thin layer of bubbles under the hull, reducing friction with water. These technologies not only lower fuel consumption but also improve vessel speed and efficiency, directly translating into lower operational expenses.
The regulations, like the IMO Energy Efficiency Existing Ship Index and Operational Carbon Intensity Indicator, have led the owner of the vessel to use energy-efficient system. Retrofitting provides a cost-effective means of achieving the stringent regulatory standards, further improving the fuel efficiency thus leading to reduced operational costs for ship-owners.
Shifting to LNG, hydrogen, and ammonia drives demand for engine and fuel system retrofits.
The shift to LNG, hydrogen, and ammonia as alternative fuels is a significant driver for vessel retrofitting. To make use of hydrogen and ammonia as the alternative fuel needs to have specialized engine and fuel system upgrades. Retrofitting ships with the alternative fuel systems, there it need to have cryogenic tanks, which make sure that these fuels are safely being used, without any wastage or risk to life.
Regulations like the IMO 2030 and 2050 carbon reduction targets push the maritime industry toward adopting cleaner energy sources such as LNG, hydrogen, and ammonia. The IMO’s focus on reducing greenhouse gas emissions by 50% by 2050, along with regional policies like the EU's Green Deal, are making the safe environment.
Retrofitting allows ship-owners to comply with these regulations and reduce the expense of building the new ship. By upgrading vessels to operate with LNG, hydrogen, or ammonia, ship-owners can achieve lower emissions, meet regulatory requirements, and position their fleets for the future of sustainable shipping.
Retrofitting offers a more affordable solution than building new vessels, providing significant savings for fleet owners.
Retrofitting provides solutions which are less expensive and are easily affordable. The ships need to be updated, so that it will not only meet government regulation, but will also provide reliable solutions.
Retrofitting allows ship-owners to upgrade their existing vessels, resulting in increasing, and their operational life. By, modifying key components such as engines, fuel systems, or propulsion technologies, owners can meet regulatory requirements, improve fuel efficiency, and reduce emissions at a fraction of the cost of a new build.
Additionally, retrofitting enables owners to take advantage of available government incentives and financial support, which are often offered for compliance with environmental regulations. Furthermore, the process of retrofitting can be completed during scheduled dry docking periods, minimizing downtime and enabling vessels to continue operations without long interruptions.
From 2019 to 2024, the global vessel retrofit market experienced steady growth, driven by tightening environmental regulations and the need to modernize aging fleets. The International Maritime Organization (IMO) regulations, particularly those targeting sulfur emissions, have compelled ship-owners to adopt retrofits like scrubbers and ballast water treatment systems.
Additionally, the push for alternative fuels such as LNG and hydrogen further boosted retrofit demand, especially in commercial cargo vessels. This period also saw increasing investments in energy-efficient technologies, including air lubrication systems and propeller upgrades, aimed at reducing fuel consumption and operational costs.
Looking ahead, the demand for vessel retrofits from 2025 to 2034 is expected to accelerate as stricter IMO and regional emission targets, such as the European Union's Fit for 55 initiative, come into force.
Retrofitting alternative fuel systems like ammonia or hydrogen storage tanks and fuel cells will become essential to achieve decarbonization goals. Moreover, advancements in renewable energy integration, such as battery storage and solar panels, will drive further adoption.
The shift toward greener, cost-effective solutions positions retrofitting as a key strategy for fleet modernization, helping ship-owners comply with evolving standards while maintaining operational efficiency and sustainability.
Tier 1 companies, comprises of the industry leaders with annual revenues exceeding USD 100 million. These companies accounts for 50-60%. They have strong customer base, because of its high quality product offering, high production capacity, diverse product portfolios, and extensive expertise in manufacturing.
These companies have good presence globally and use the best technology to meet regulatory standards. These include players like MITSUBISHI HEAVY INDUSTRIES, LTD., ALFA LAVAL, and other key players.
Tier 2 companies are medium sized companies with annual revenues below 100 million. These companies influence regional markets with its technological capabilities and strictly follows the regulations. Their global presence is not as much as those of Tier 1 companies. The Tier 2 companies like SCHOTTEL Group, Corvus Energy, RK Marine Services, and others.
The section below highlights assessments of vessel retrofit sales across key countries. USA, Brazil, Germany, India and South Africa are expected to showcase promising growth, with each exhibiting a strong CAGR through the forecast period.
| Country | Value CAGR (2024 to 2034) |
|---|---|
| USA | 3.7% |
| Brazil | 6.6% |
| Germany | 3.6% |
| India | 4.9% |
| South Africa | 5.4% |
Stringent emissions laws in the United States is driving vessel retrofitting. To comply with international environmental standards set by the International Maritime Organization (IMO), government are charging fines, who are not following protocol. Its goal is to reduce greenhouse gas emissions by at least 50% compared to 2008 levels.
These retrofits help reduce pollutants like sulphur oxides and carbon dioxide, aligning with USA environmental policies and enhancing the global competitiveness of USA-flagged vessels.
The Environmental Protection Agency and California Air Resources Board’s regulations are helping the ship-owners to implement cleaner technologies and adopt solutions that reduce fuel consumption. The Jones Act and the demand for high operational standards in USA waters have induced to meet national as well as international emission standards.
Expanding LNG adoption in Brazil is driving vessel retrofitting, as the country seeks to meet stricter environmental regulations and reduce carbon emissions. Its commitment to sustainability and its growing LNG infrastructure, retrofitting existing vessels to run on LNG is a cost-effective solution. LNG reduces sulfur oxides, nitrogen oxides, and particulate matter.
By converting older vessels to LNG, ship-owners can easily follow environmental regulations. Its compulsion toward LNG adoption is helping in reducing dependence on traditional marine fuels. As LNG is more accessible, retrofitting offers a practical way for operators to modernize their fleets. LNG retrofits also supports green energy transition, further enhancing the sustainability of its maritime sector.
Cost-effective fleet upgrades are helping ship-owners to follow the stringent environmental regulations. The Indian government are focusing on reducing carbon emissions and meeting international sustainability standard.
Upgrading older vessels with energy-efficient systems, emission control technologies, and alternative fuel capabilities meet IMO 2020 and upcoming carbon reduction targets without the financial burden of purchasing new ships. These retrofits allow vessels to improve fuel efficiency, reduce operating costs, and extend their operational lifespan.
India's growing focus on reducing its maritime sector's environmental impact, combined with rising fuel costs and government incentives for cleaner technologies, makes retrofitting a financially viable option for many fleet owners. Moreover, retrofitting helps Indian vessels stay competitive globally, where stringent emission standards are becoming the norm.
As India moves toward more sustainable shipping practices, retrofitting provides an effective way to modernize the fleet, achieve regulatory compliance, and contribute to the country’s broader environmental goals while avoiding the capital expenditure of building entirely new ships.
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The section explains the growth of the leading segments in the industry. In terms of retrofit type, the alternative fuel retrofits category will likely dominate and generate a share of around 14.2% in 2024.
| Segment | Alternative Fuel Retrofits (Retrofit Type) |
|---|---|
| Value Share (2024) | 14.2% |
Alternative fuel retrofits are dominating the vessel retrofit market due to increasing global regulations aimed at reducing carbon emissions and enhancing sustainability in the shipping industry. Due to rise in strictness by the International Maritime Organization regarding sulfur cap and 2030 carbon reduction targets, vessel owners are inclined towards the usage of alternative fuel systems, to comply with the regulations.
The preference for alternative fuel retrofits is in rise because of increasing focus on fuel efficiency and cost-effectiveness in the shipping sector. Traditional marine fuels, were not only costly but also come with environmental concerns. LNG, hydrogen, and ammonia offer a more sustainable solution while providing long-term savings in operational costs.
| Segment | Commercial Cargo Vessel (Vessel type) |
|---|---|
| Value Share (2024) | 42.6% |
Commercial cargo vessels dominate the vessel retrofit market due to their significant role in global trade and the large number of these vessels in operation worldwide. Cargo vessels, including bulk carriers, container ships, and tankers, are essential for transporting goods and raw materials across international waters.
These vessels typically have long lifespans, and their retrofit needs are driven by the need to comply with ever-tightening emissions regulations. Retrofits in cargo vessels often include the installation of energy efficiency technologies, emission control systems, and alternative fuel capabilities, enabling them to meet environmental standards and improve fuel efficiency without the expense of building new ships.
The commercial cargo vessels are heavily impacted by operational costs, including fuel consumption and maintenance. Retrofitting offers a cost-effective solution by improving fuel efficiency, reducing emissions, and extending the operational life of these vessels.
As these vessels are central to the global supply chain, optimizing their performance is critical for maintaining competitiveness. Moreover, many cargo vessels are being retrofitted to accommodate alternative fuels like LNG, which is becoming increasingly important for reducing emissions and meeting IMO’s decarbonization goals.
The key players in the vessel retrofit industry are working on enhancing their capabilities and resources to meet the increasing demand across by the ship owner. It involves investments in state-of-the-art technologies, extension of service offerings, and optimizing operational efficiencies.
With an increase in their resource base, the companies can provide high-quality and reliable services that respond to the changing needs of clients and stay ahead of the competition in the market.
Most leading companies are known to form strategic partnerships and joint ventures to co-develop innovative new products and solutions. This practice may lead to significant sector and technological innovation by using the expertise and resources of these collaborations. This diversification allows the companies to enter new industries and address the specific requirements of various end-use industries across different fields.
The major players have been utilizing geographic expansion to capture new growth opportunities. This ranges from entry into emerging customer bases to increasing their footing in the existing ones. Spreading footprints across the globe gives companies access to new customer bases, diversifies revenue streams, and reduces the risk of market saturation.
Industry Updates
In terms of Retrofit Type, the industry is divided into Alternative Fuel, Energy Efficiency Retrofits, Emission Control Retrofits and Renewable Energy Integration.
The industry, in terms of Vessel type, is segmented into Commercial Cargo Vessels, Passenger Vessels, and Specialized Vessels.
Key countries of North America, Latin America, Western Europe, Eastern Europe, East Asia, South Asia, the Middle East, and Africa (MEA), have been covered in the report.
The global demand was valued at USD 6,226.2 million in 2023.
The global market is set to reach USD 6,521.5 million in 2024.
Global demand is anticipated to rise at 5.0% CAGR.
The sales are projected to reach USD 10,168.7 million by 2034.
MITSUBISHI HEAVY INDUSTRIES, LTD., ALFA LAVAL, Kongsberg Maritime, MAN Energy Solutions and others are prominent companies.
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