Naval Vessels and Surface Combatants Market– Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Ship Type (Destroyers, Corvettes, Submarines, Amphibious Ships, Frigates, Auxiliary Vessels), By System Type (Marine Engine System, Weapon Launch System, Sensor System, Control System, Electrical System, Auxiliary System, Communication System), By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 478.33 Million
CAGR (2026-2031)	6.03%
Fastest Growing Segment	Electrical System
Largest Market	North America
Market Size (2031)	USD 679.67 Million

Market Overview

The Global Naval Vessels and Surface Combatants Market will grow from USD 478.33 Million in 2025 to USD 679.67 Million by 2031 at a 6.03% CAGR. The Global Naval Vessels and Surface Combatants Market comprises the design, manufacturing, and lifecycle support of military maritime platforms, including destroyers, frigates, and amphibious ships tailored for national defense and combat operations. Growth is primarily propelled by intensifying geopolitical instability and the imperative to safeguard territorial waters and commercial shipping lanes, which compels nations to prioritize fleet renewal and modernization programs. According to the Aerospace, Security and Defence Industries Association of Europe, in 2024, the European defense sector turnover, which encompasses naval manufacturing, reached €183.4 billion, reflecting a 13.8% rise driven by these elevated security requirements.

However, a substantial challenge hindering market progression is the prohibitive cost associated with procuring and maintaining advanced naval assets. Budgetary limitations, exacerbated by supply chain volatility and inflationary pressures on raw materials, often necessitate the postponement of critical shipbuilding contracts, thereby slowing the pace of global fleet expansion efforts.

Key Market Drivers

Escalating geopolitical tensions and regional maritime disputes serve as a primary catalyst for the expansion of the naval vessels market. Nations are aggressively countering perceived threats to sovereignty and trade routes by initiating extensive fleet modernization programs. This strategic shift involves replacing aging platforms with advanced surface combatants capable of operating in contested environments. High-intensity conflict zones, such as the Red Sea and the Indo-Pacific, have necessitated the deployment of versatile frigates and destroyers equipped with enhanced survivability features. This urgency is reflected in major industrial order books as navies secure production slots for future assets. According to Fincantieri, July 2024, in the 'First Half 2024 Results', the company reported a total backlog of €41.1 billion, a figure significantly bolstered by the defense sector's robust demand for new naval units amidst global instability.

The surge in national defense budgets and naval procurement spending directly facilitates the acquisition of these next-generation maritime assets. Governments are allocating record levels of funding to strengthen naval capabilities, prioritizing the integration of directed energy weapons, missile defense systems, and unmanned technologies into their surface fleets. This financial commitment ensures the continuity of long-term shipbuilding projects and supports the industrial base required for complex naval construction. For instance, according to the U.S. Department of the Navy, March 2024, in the 'Highlights of the Department of the Navy FY 2025 Budget', the service requested $32.4 billion specifically for shipbuilding and conversion to procure six new battle force ships. Furthermore, broader fiscal policies in competitor nations underscore this trend of militarization. According to Reuters, March 2024, in the article 'China raises defense spending by 7.2%', the Chinese government announced a defense budget increase to 1.67 trillion yuan, continuing a multi-year trajectory of elevated military expenditure that drives competitive procurement cycles globally.

Download Free Sample Report

Key Market Challenges

The primary obstacle restricting the Global Naval Vessels and Surface Combatants Market is the prohibitive cost of procurement and maintenance, compounded by supply chain volatility and inflation. These financial and logistical barriers directly impede market expansion by forcing nations to scale back or delay modernization efforts despite rising security needs. When raw material prices surge and component availability becomes unpredictable, shipbuilders face extended lead times and cost overruns that often exceed initial budget allocations. Consequently, defense ministries are frequently compelled to revise procurement strategies, leading to the postponement of new vessel contracts and a slower rate of fleet renewal.

This financial instability creates a precarious environment for long-term industrial planning. According to the National Defense Industrial Association, in 2024, the Department of the Navy estimated that 30% of its shipbuilding account would be inexecutable under a year-long continuing resolution due to such fiscal uncertainties. Such budgetary constraints disable the industry's ability to maintain steady production lines, ultimately stalling the delivery of critical maritime assets and hampering the overall growth trajectory of the global naval market.

Key Market Trends

The Utilization of Additive Manufacturing for Naval Maintenance is emerging as a critical solution to overcome persistent supply chain vulnerabilities and casting delays that plague traditional shipbuilding. By shifting from centralized factory production to point-of-need fabrication, navies can rapidly produce essential components onboard or at forward operating bases, thereby reducing logistical lead times from months to days. This capability is particularly vital for sustaining aging fleets where original parts are no longer manufactured, offering a decentralized approach to material readiness. For instance, according to DoD News, February 2025, in the article 'Additive Manufacturing Brings Money-Saving Innovations to Life at NUWC Keyport', the U.S. Navy announced that the USS Michigan's 2025 overhaul would integrate 33 3D-printed metal components, a significant increase from the single-digit installations in previous years, validating the technology's growing role in operational sustainment.

The Enhancement of Cybersecurity Protocols for Ship Systems has become a strategic priority as naval platforms increasingly rely on interconnected digital architectures and data links. With the convergence of operational technology and information systems, vessels are exposed to sophisticated cyber threats that can compromise navigation, propulsion, and combat capabilities without physical engagement. Navies are responding by embedding robust defensive cyber operations directly into the lifecycle support of fleet assets to ensure mission resilience in contested electronic environments. Illustrating this commitment, according to SatNews, December 2025, in the article 'Castellum Subsidiary SSI Secures $66.2 Million NAVAIR Engineering Contract', Specialty Systems, Inc. was awarded a $66.2 million contract to provide comprehensive cybersecurity and systems engineering support for the 'SHIELD' portfolio, aimed at hardening the digital infrastructure of deployed naval aviation and defense platforms.

Segmental Insights

The Electrical System segment functions as the fastest growing category within the Global Naval Vessels and Surface Combatants Market due to the rising demand for efficient power generation and distribution. Modern naval modernization programs increasingly prioritize Integrated Electric Propulsion to optimize fuel consumption and reduce acoustic signatures. Additionally, the deployment of high-energy radar systems and directed energy weapons requires substantial electrical capacity that exceeds legacy mechanical capabilities. This reliance on energy-intensive technologies compels defense contractors to install robust electrical infrastructures to maintain operational readiness.

Regional Insights

North America maintains a dominant position in the Global Naval Vessels and Surface Combatants Market, largely due to the substantial defense appropriations allocated by the United States government. This leadership is underpinned by the United States Navy's strategic initiatives, specifically its long-term shipbuilding plan designed to increase fleet size and readiness in response to evolving geopolitical challenges. The presence of a mature industrial base, comprising major defense contractors, facilitates the continuous development of naval platforms. Furthermore, the Department of Defense prioritizes maritime security and global power projection, ensuring sustained investment in surface combatants and submarines.

Recent Developments

• In December 2025, HJ Shipbuilding & Construction conducted a launching ceremony for four new Chamsuri-class PKMR fast attack craft at its shipyard in Busan, South Korea. These 230-ton surface combatants represent the first units of the Batch-II program, which is designed to replace the country's aging fleet of patrol vessels. The newly launched ships feature significant upgrades in firepower, including 130 mm guided rockets, as well as advanced combat and sensor systems. Following this milestone, the vessels are scheduled to undergo rigorous sea trials before their final delivery to the Republic of Korea Navy in late 2026.
• In December 2025, Babcock International Group achieved a major production milestone with the keel laying of HMS Formidable, the third Type 31 Inspiration-class frigate, at its Rosyth facility in Scotland. This ceremonial event marked the formal start of the vessel's hull assembly, utilizing the company's modular construction techniques. The Type 31 program is a key component of the Royal Navy's strategy to expand its surface fleet with flexible, general-purpose frigates capable of undertaking diverse maritime security missions. This development underscores the continued progress in regenerating the United Kingdom's naval shipbuilding capacity and delivering modern capabilities to the fleet.
• In November 2025, Fincantieri entered into a significant agreement with the United States Navy to restructure the ongoing Constellation-class frigate program. Under the terms of this new arrangement, the Italian shipbuilder will proceed with the construction of the first two frigates at its Marinette Marine shipyard, while contracts for four subsequent vessels were cancelled to align with shifting strategic priorities. The agreement also provides a framework for Fincantieri to potentially secure future orders for different vessel types, such as amphibious ships and icebreakers, ensuring the continuity of its industrial operations and maintaining the skilled workforce at its Wisconsin facilities.
• In May 2025, Naval Group and Kongsberg Defence & Aerospace formally signed a strategic partnership agreement to deepen their collaboration within the global naval defense sector. This alliance focuses on joint efforts in development, production, and marketing across several critical areas, including frigate maintenance, combat systems, and advanced strike missiles. By combining their respective technological strengths, the two companies aim to deliver enhanced solutions for surface combatants and address the evolving operational requirements of navies worldwide. The agreement also solidifies a long-term industrial cooperation framework intended to secure high-skilled jobs and drive innovation in both France and Norway.

Key Market Players

• BAE Systems plc
• Mazagon Dock Shipbuilders Limited
• Damen Shipyards Group
• FINCANTIERI S.p.A.
• General Dynamics Corporation
• LARSEN & TOUBRO LIMITED
• Navantia S.A.
• thyssenkrupp AG
• Korea Shipbuilding & Offshore Engineering Co., Ltd
• Mitsubishi Heavy Industries, Ltd.

By Ship Type	By System Type	By Region
Destroyers Corvettes Submarines Amphibious Ships Frigates Auxiliary Vessels	Marine Engine System Weapon Launch System Sensor System Control System Electrical System Auxiliary System Communication System	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Naval Vessels and Surface Combatants Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Naval Vessels and Surface Combatants Market, By Ship Type:

• Destroyers
• Corvettes
• Submarines
• Amphibious Ships
• Frigates
• Auxiliary Vessels

• Naval Vessels and Surface Combatants Market, By System Type:

• Marine Engine System
• Weapon Launch System
• Sensor System
• Control System
• Electrical System
• Auxiliary System
• Communication System

• Naval Vessels and Surface Combatants Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE