00:00Now, China's two major shipbuilding firms have announced a $16 billion merger.
00:06It comes amid a push by the Trump administration to rebuild American shipyards.
00:11China's state shipbuilding will this week absorb China shipbuilding industry
00:16and take the sole listing on the Shanghai Stock Exchange.
00:20The tie-up will create the world's biggest shipbuilding company
00:23with around 17% of the global market.
00:27In the United States, Donald Trump wants to revive American shipbuilding.
00:31Part of that plan will see Washington impose port fees from October on Chinese-linked ships.
00:38This will affect vessels that are either Chinese-owned or built,
00:41and that's given a boost to rival companies such as those in Japan and South Korea.
00:47Now, China dominates global shipbuilding.
00:49Its output accounted for more than half of the world's total last year,
00:54with America only producing 0.05%.
01:00That means China already owns 232 times the shipbuilding capacity of the United States.
01:08Martin Stockford is the author of the book Maritime Economics
01:11and is a renowned expert on the global shipping industry.
01:15Thank you so much for joining us.
01:16I was reading up on these two companies.
01:19They used to be one company.
01:20China then split them up.
01:22Now they're getting back together again.
01:24What's the thinking behind this, do you think?
01:27I believe the real issue here is technology.
01:32The maritime industry has been through 20 or 30 years
01:36when technology has not changed very much,
01:39and suddenly it's come to a watershed where it has to do two major things.
01:45First of all, it has to move along the road towards zero carbon.
01:49And regulators are requiring this.
01:54And it needs to bring on board the digital technology and artificial intelligence,
02:00which have been used by motor vehicles for many years,
02:04but are hardly used at all in shipping.
02:07And it's a tough business.
02:09And I think the great logic behind bringing these two groups back together again
02:16is that it means you can plan and coordinate and fund investments in these new technologies.
02:22What has given China the edge, clearly a leader in shipbuilding,
02:26and what will this merger do to perhaps further itself in this race?
02:31China grew the last 15 years mainly on the basis of being a bit cheaper
02:41than the other big shipbuilders in Japan and Korea.
02:44I mean, you could get a decent ship for 10% less in China,
02:48and that's a lot of money on a $100 million ship.
02:51So that helped them a lot.
02:55They got a lot of benefit out of the fact that they were part of the government's,
03:04Beijing's long-term vision, shipbuilding and marine equipment have been in that vision
03:10for at least 20 years.
03:11And I think that gave them the framework to grow.
03:16And most importantly of all, China is also the world's biggest cargo producer
03:22and importer and exporter in the world.
03:25About 2 billion tons added in the last 20 years.
03:30And that meant that the shipyards have lots of domestic customers who can come.
03:36And, you know, that's what every shipyard wants,
03:39is somebody to help them out when the market's a bit quiet
03:42and the shipbuilding market is very volatile.
03:45So that domestic market's been a big help to the shipbuilders.
03:50From October, the United States is planning to tax any ships
03:55that are either linked to China or built by China.
03:59Is that going to have a big impact?
04:03Well, I think we've all been following this in many different areas.
04:08I mean, behind it, I think there is a perfectly reasonable logic.
04:13And I think you mentioned it yourself earlier,
04:16that the United States has not really been very involved in merchant shipbuilding at all
04:21for the last three or four decades.
04:24And it's very expensive to build ships there.
04:28And suddenly they've realized that, you know,
04:31maybe they want to have a little bit of independence from Asia,
04:35which now is not just China, but Korea and Japan are about well over 90 percent of world shipbuilding.
04:43So this is just them looking at it and saying,
04:46well, we would like to have a slightly more stable situation.
04:50And one element, as you mentioned, is the tax on Chinese-built ships,
04:57which account for about half of the fleet at the moment.
05:00And the other factors that are going to influence this are the Americans want to build more.
05:09They want to encourage people to build ships in the United States
05:13and also to carry export cargoes such as LNG in U.S. build ships.
05:21And so that's, you know, it's one of many plans that they have underway at the moment.
