TOKYO - Japan is stepping up efforts to revive its shipbuilding industry, aiming to double annual construction volume by 2035 through government-backed investment in next-generation vessels, ship repair facilities and liquefied natural gas carriers, while Japanese manufacturers accelerate the development of hydrogen-powered engines and other advanced maritime technologies.
Under a public-private roadmap adopted in July as part of Japan's growth strategy, the government aims to increase annual shipbuilding volume to 18 million gross tons by 2035, twice the 2024 level, and expand the domestic industry's market size to 5 trillion yen.
Shipbuilding is one of 17 strategic sectors designated by the government for industrial development. The initiative is intended to strengthen Japan's international competitiveness while reducing its dependence on overseas shipbuilders for vessels critical to trade and energy security.
Japan dominated the global shipbuilding market in the 1970s, accounting for approximately half of worldwide construction. However, intensifying price competition and the expansion of Chinese and South Korean shipyards have steadily eroded its position. Japan's global market share stood at around 25% in 2018 but has since fallen below 10%.
China has invested heavily in expanding its shipbuilding capacity through large-scale government support, while South Korea has promoted technological development and industrial competitiveness as part of its national strategy. The United States, which led global shipbuilding in the 1940s, is also pursuing measures to strengthen its domestic industry.
Against this competitive backdrop, Japan's government has concluded that private-sector investment alone will be insufficient to restore the country's shipbuilding capacity.
According to government figures, maritime transport accounts for 99.6% of Japan's international trade volume, making domestic shipbuilding capacity an important component of economic security. Global seaborne transport volumes are also increasing by an average of approximately 3.5% annually, supporting expectations of continued demand for new vessels.
The government's support program focuses on three areas: next-generation ships, ship maintenance and repair, and LNG carriers.
Next-generation vessels are receiving particular attention, with public and private investment totaling approximately 1 trillion yen planned for the sector. The initiative emphasizes environmentally advanced ships, including zero-emission vessels designed to eliminate greenhouse gas emissions.
Conventional shipbuilding remains an intensely competitive market dominated by Chinese and South Korean manufacturers. However, zero-emission vessels require fundamentally different designs and propulsion systems, potentially creating an opportunity for Japanese shipbuilders to regain a competitive position through technological innovation.
LNG carriers represent another strategic priority. Despite Japan's substantial imports of liquefied natural gas, the country currently has no domestic construction of LNG carriers. Maintaining the technical expertise required to build these vessels has consequently become an economic security concern.
The government expanded its support framework in December 2025 under the Economic Security Promotion Act, adding ship hulls to its list of designated critical products. Previously, support had covered essential ship components such as engines and propellers. The expanded designation allows shipyards to receive assistance for equipment investments designed to increase construction capacity.
One proposal under consideration is the establishment of nationally developed shipbuilding docks. Because modern shipyards require enormous facilities and substantial capital expenditure, the government is examining a model in which the state constructs docks that private companies can then use to build vessels.
Such an arrangement could reduce the financial burden on individual shipbuilders while facilitating investment in cranes, automation and labor-saving equipment. These investments are particularly important as the industry faces labor shortages.
Concrete measures began taking shape in September. The Ministry of Land, Infrastructure, Transport and Tourism announced on September 4 that it had approved equipment investment plans submitted by three major shipbuilding groups: Imabari Shipbuilding, Japan Marine United and Namura Shipbuilding.
Japan Marine United, based in Kanagawa Prefecture, is a subsidiary of Imabari Shipbuilding.
The approvals represent the first projects under the government's expanded shipbuilding support framework. Public and private investment totaling approximately 600 billion yen is planned over the next decade, with subsidies of up to 213.1 billion yen available to the three groups.
The investments are expected to increase their combined shipbuilding capacity by approximately 50% from current levels. Additional projects are also being prepared as the government moves to implement its industrial strategy.
Among listed companies, Namura Shipbuilding, traded under securities code 7014, is positioned as a major participant in the expansion. The company has strengthened its operations through acquisitions, bringing Hakodate Dock under its control in 2008 and making Sasebo Heavy Industries a subsidiary in 2014.
Namura produces a broad range of commercial vessels, including large tankers, bulk carriers and smaller tankers. Its inclusion in the government's first round of approved investment plans places it among the companies directly involved in expanding Japan's domestic construction capacity.
Mitsui E&S, listed under code 7003, is another company connected to the industry's expansion. Formerly known as Mitsui Engineering & Shipbuilding, the company withdrew from ship construction after struggling with profitability and now holds a leading domestic position in marine diesel engines.
The company is also one of the world's major manufacturers of port cranes. An expansion of Japanese shipyard capacity could therefore increase demand for both its marine engines and cargo-handling equipment.
Chugoku Marine Paints, listed under code 4617, is another potential beneficiary of increased vessel construction. The company holds approximately 60% of Japan's marine coatings market and ranks second globally. Its products are supplied to shipbuilders in Japan, China and South Korea.
The development of next-generation propulsion systems is creating opportunities for Japanese engineering companies as well.
Japan Engine Corporation, listed under code 6016, announced on September 8 that it had developed what it described as the world's first hydrogen engine for large commercial ships in cooperation with Kawasaki Heavy Industries and other partners.
According to the companies, the engine achieved a reduction of more than 95% in greenhouse gas emissions compared with conventional technology. Factory testing also demonstrated operation with hydrogen accounting for more than 95% of the fuel mixture.
The first engine is scheduled to be installed in a new vessel being constructed by Onomichi Dockyard for Mitsui O.S.K. Lines. Demonstration testing aboard the vessel is planned to begin in April 2028.
The project is an important example of Japan's strategy to establish a competitive position in environmentally advanced ship propulsion, an area where the transition away from conventional marine fuels could change the structure of the global shipbuilding industry.
Iwatani Corporation, listed under code 8088, is also developing hydrogen-related maritime technologies as it seeks to make hydrogen a central pillar of its future business.
The company has developed the Mahoroba, a hydrogen fuel-cell vessel that operated as a moving pavilion during Expo 2025 Osaka, Kansai. Iwatani also installed hydrogen refueling infrastructure to support the vessel's operation.
An increase in hydrogen-powered ships could create additional demand for hydrogen production, transportation and refueling facilities, expanding business opportunities beyond vessel construction itself.
Kawasaki Heavy Industries, listed under code 7012, is pursuing another approach to next-generation shipping through its development of liquefied hydrogen carriers.
The diversified heavy machinery manufacturer already produces LNG and liquefied petroleum gas carriers and has been developing technologies for transporting hydrogen at extremely low temperatures.
In January 2026, Kawasaki announced that it had secured a contract to build what it described as the world's largest liquefied hydrogen carrier, with a capacity of 40,000 cubic meters. The vessel was ordered by Japan Suiso Energy, with completion targeted for 2030.
The project forms part of broader efforts to establish an international hydrogen supply chain, combining advanced shipbuilding capabilities with technologies for transporting alternative fuels.
Japan's shipbuilding revival will depend not only on expanding conventional construction capacity but also on securing a technological advantage in next-generation vessels. Government investment in shipyards, support for critical maritime infrastructure and the development of hydrogen propulsion systems are intended to provide the foundations for that transformation.
The industry's ability to secure skilled workers, expand production facilities and commercialize new technologies will be central to achieving the government's goal of doubling shipbuilding volume by 2035.
Source: CNBC
