Marine Variable Frequency Drive Market Size, Share & COVID-19 Impact Analysis, By Type (AC Drive, DC Drive, Servo Drive), By Application (Propellers, Pumps, Electric Fan, HVAC, Compressors, Others), By End-user (Marine Vessels, Offshore Oil & Gas, Offshore Wind Power) and Regional Forecasts, 2022-2029

The global marine variable frequency drive market size was valued at USD 1.21 billion in 2021 and is projected to grow from USD 1.25 billion in 2022 to USD 1.68 billion by 2029, exhibiting a CAGR of 4.3% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with marine variable frequency drive experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global marine variable frequency drive market exhibited a decline of -2.1% in 2020 as compared to 2019.

Variable Frequency Drives (VFD) are a type of motor drive used in electromechanical drive systems that change the speed of an AC motor by varying the input frequency of the motor and controlling the associated voltage or current changes depending on the topology to control associated voltage or current variation. The application of marine variable frequency drive helps ships effectively control the electric motors of thrusters and steering mechanisms, propulsion units, pump and compressor equipment, ventilation systems, cranes, winches, and others, thereby reducing energy consumption.

COVID-19 IMPACT

Disruptions in Supply Chains and Closure of Production Units to Slow Down Growth during Pandemic

COVID-19 has affected the global economy mainly in three ways by directly affecting production and demand, by its financial impact on manufacturers, and by creating supply chain and market disruption. Transportation through ships, cargo ships, and others is another major factor for the global supply chain links and economic dependence. It is estimated that marine transports handle over 80% of the world's trade in goods by volume and approximately 70% by value. As an outcome, with disruptive factors, such as the COVID-19 pandemic, the industry experienced shockwaves across supply chains and geographies.

Although COVID-19 has already disrupted the shipping industry in several ways, the offshore sector has also experienced the severe impact of the pandemic. As many offshore companies are experiencing low prices. For context, as per the Organization for Economic Co-operation and Development (OECD), Brent crude oil, which is generally produced from offshore locations, has experienced a price contraction of around 25% in 2020, the most significant decline since December 2008.

In addition, as per NCBI, there was nearly 25% decrease in petroleum consumption during the COVID-19 pandemic in the short term, whereas a 30% to 40% decline in the capital cost and research & development investment in oil & gas industry, which acted as a long term impact, resulting in a disruption in supply & demand, price, and investment in the energy sector.

LATEST TRENDS

Remote Monitoring in VFDs Creates Opportunities to Increase the Efficiency of Systems

Drives can be exposed to various harmful external influences, including environmental degradation, degraded power quality, improper application, and others. This factor can result in a shutdown and may cause losses to the end user. Companies are looking for solutions that integrate remote monitoring to monitor these external conditions and minimize downtime. Remote tracking of ship VFDs is essential in determining the deterioration status. Additionally, end-users can remotely troubleshoot minor ship VFD failures, reducing unplanned downtime and improving efficiency. The marine variable frequency drive's performance can be viewed and analyzed by continuously collecting and transferring data to the cloud. A standard dashboard and pre-configured trend charts and reports show the drive's historical performance in real-time. Thus, the problems can be predicted more accurately, saving significant money.

DRIVING FACTORS

Surge in Demand for Energy-efficient Systems for Maritime Vessels Propels Market Growth

Technology has continuously evolved to achieve greater efficiency, as energy efficiency has been one of the main concerns for multiple sectors. For instance, as per International Energy Agency (IEA), the shipping industry accounts for around 2% of global energy-related carbon dioxide (CO2) emissions. To achieve the goal of becoming carbon neutral in the coming years, set by the International Maritime Organization (IMO), priorities are given to energy-efficiency measures and slow steaming in the short term to reduce their CO2 emissions.

To meet the carbon neutral target, the International Maritime Organization (IMO) has enforced the Ship Energy Efficiency Management Plan (SEEMP), which focuses on energy-efficiency criteria for new ships, whereas the Energy Efficiency Design Index (EEDI) rules majorly focuses on increasing shipping efficiency. Furthermore, the EEDI exclaims to increase the efficiency by 1.5% yearly for the new marine fleet from 2015 to 2025. The increasing traction of energy-efficiency systems is procuring high importance with multiple regulations and growing concerns for CO2 emission, which in turn will propel the demand for variable frequency drives for marine vessels as it helps in reducing energy consumption by 60%.

Increased Maritime Trade and Focus on Efficient Ships Operation to Drive Growth

According to the International Chamber of Shipping, the international shipping industry is responsible for around 90% of world trade which includes intercontinental trade, bulk transportation of commodities, and import/export of affordable food and manufactured goods would not be possible. Maritime trade continues to expand, bringing benefits to consumers worldwide through competitively cheaper freight rates. Ships are sophisticated, high-value assets (more significantly, high-tech ships can cost over USD 200 million to build), and merchant vessel operations generate an estimated annual income of over half a trillion dollars in freight rates. Consequently, the increasing growth in maritime trade has led to an increase in the need for vessels used to transport industrial goods around the world, which is expected to further fuel the marine variable frequency drive market growth.

RESTRAINING FACTORS

High Cost Associated with Installation & Maintaining the Variable Frequency Drives to Hinder Market Growth

The cost of installing a variable frequency drive can provide substantial energy benefits in the long run but is comparatively high compared to traditional energy-saving methods. The overall cost of installing a VFD to an available general-purpose system is USD 200 to USD 500 per horsepower (HP), which is much higher than that of other energy-saving systems.

Moreover, the use of different types of drives, foundations, wirings, and components differs based on the requirement, industry usage, and increasing installation cost. In parallel, skilled technicians are required to install VFDs, increasing installation costs. High initial and installation costs are likely to hinder the market growth.

SEGMENTATION

By Type Analysis

Energy-saving Characteristic of AC Drives Results in its Dominating Share

The market is segmented into AC drive, DC drive, and servo drive based on type. The AC drive segment holds a dominant market share as it is majorly used for controlling the speed of various electronic components based on the frequency and voltage of electric supply. This has resulted in the supply of a large volume of AC drives for the type of VFDs.

DC drive-type technology is an efficient, definitive, inexpensive, relatively easy-to-use variable frequency drive technology. In parallel, the DC drive offers many advantages for high-power & regenerative applications, resulting in its significant market share. The servo drive is another type of VFD used in the marine industry. This type of drive is widely used across automated machines equipped with sensors.

By Application Analysis

Propellers Dominate the Market as they are Used for the Movement of Marine Vessels

Based on application, the market is segmented into propellers, pumps, HVAC, electric fan, compressors, and others. Using VFD in propellers to increase energy efficiency by 20%-30% results in the dominating share of propeller applications. Further, the use of variable frequency drive to regulate the pressure flow coupled with significant cost savings effectively makes it one the most viable option in pumping application, resulting in a considerable share of pump application.

Air handling systems, widely used in marine vessels to provide clean, cooled, or heated air to designated spaces in the ship's accommodation area or other areas, majorly use electric fans/fans to operate, resulting in a significant share of electric fans in marine variable frequency drive. Furthermore, variable frequency drives are also being used in HVAC applications more frequently as they can modulate the motor speed smoothly within a wide range. This results in reduced motor speed and significantly reduces motor power. Other applications, such as the marine industry's cranes, hoists, and winches, also possess significant global adoption of marine variable frequency drive.

By End-user Analysis

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Marine Vessels to Dominate the Market Due to Focus in Reducing Operational Cost

Based on end-user, the marine VFD market is categorized into marine vessels, offshore oil & gas, and offshore wind power. Globally, there is enormous potential for retrofitting existing marine vessels with new fuel-reducing technologies. For context, less than 5% of the global fleet is currently equipped with variable frequency drives for their seawater cooling pumps, which means there is a vast potential for VFDs to reap high fuel savings and environmental rewards.

Additionally, offshore oil & gas relies heavily on motor-driven pumps and pumping systems to ensure efficient fluid transfer. Keeping electric motors running during critical operations and peak performance is essential, resulting in the broad adoption of VFDs across offshore oil & gas vessels.

REGIONAL INSIGHTS

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This market is categorized into North America, Europe, Latin America, Asia Pacific, and the Middle East & Africa. Asia Pacific dominates the marine variable frequency drive market share due to increased optimized energy solutions demand and carbon emission standards across various countries. For context, as per ICCT, CO2 emissions from China's domestic coastal shipping could peak by 2040 and fall significantly by 2060, with the help of mandatory energy-efficiency standards. Furthermore, in North America, the demand for VFDs in the marine industry is propelled due to advancements in marine energy technology, such as offshore wind energy, which is still at a relatively early stage of development.

Simultaneously, implementing the forthcoming global and European climate change regulation offers market opportunities for European marine equipment suppliers and shipyards, resulting in significant market growth in Europe during the forecast period. Additionally, in the Middle East & Africa, the market growth is majorly attributed to increased drilling and exploration activities to discover new oil & gas deposits with high potential in the offshore environment. For example, in December 2020, national hydrocarbon giant Saudi Aramco found four oil & gas prospects in offshore waters.

KEY INDUSTRY PLAYERS

Key Participants are Concentrating on Enhancing their Product Launch Capacities

The global market of marine variable frequency drive is at its neonate stage, with many players providing their products to various offshore industries. Numerous players are actively operating across the globe to cater to the increasing demand from almost every end-use industry.

Major marine variable frequency drive players, including ABB, Wärtsilä, and Danfoss Drives, also operate in the market. ABB is anticipated to lead the industry with a long-standing presence and robust product offerings for various industries. Furthermore, numerous players operating in the industry are focused on delivering advanced solutions with components upgraded to cater to the growing demand for energy-efficient solutions.

Key industry companies continuously strive to introduce a highly efficient portfolio with low maintenance costs and accessible integration features, further enhancing the market's competitive landscape.

List of Key Companies Profiled:

• Siemens (Germany)


• ABB (Switzerland)


• Sumitomo Heavy Industries (Japan)


• Danfoss Drives (Denmark)


• Triol Corporation (U.S.)


• Bulutlu Marine (Turkey)


• Wärtsilä (Finland)


• Yaskawa Corporation (Japan)


• Johnson Controls (U.S.)


• G.E. Power (U.S.)


• C.G. Drives & Automation (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• October 2021 - Siemens announced to prepare separation for its large drive system unit. The unit is part of Siemens' so-called portfolio businesses which produces heavy-duty electrical drive systems for ships, mines, and rolling mills, which is the first step to a divestiture. Further operations which the company wants to either improve or sell off in the future.


• April 2021 - ABB has been awarded a contract by Spanish shipbuilder Astilleros Gondán to supply its all-electric powered solution for its fleet, which consist of rapid 40-meter city passenger ferries operating on the Tagus River in Lisbon.


• January 2021 - Beckhoff Automation, which provides servo motors and servo drives under its new automation technology, has announced its service expansion to MHI's Solutions Community and Conveyor and Sortation Systems (CSS). MHI is one of the leading material handling, logistics, and supply chain trade organizations in the U.S., to provide its mastery in intralogistics and material handling solutions.


• December 2020 – Cochin Shipyard commissioned Siemens to instrument newfangled marine solutions for India's first fleet of 23 boats, which are equipped with electric propulsion and battery-integrated technology.


• January 2019 – Danfoss’s EDITRON, the world's most sophisticated electric drivetrain system, has teamed up with Kongsberg Evotec, part of Kongsberg Maritime International Technology Group, to develop a fully electric marine winch which will be powered by EDITRON, the world's most sophisticated electric drivetrain system.

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The research report on marine variable frequency drive presents a comprehensive industry assessment by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the market.

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