News from the recently concluded U.S. Surface Navy Association Annual Conference and Expo highlights the wide interest in the latest frigate and destroyer developments.
The “return” (after a post-Cold War hiatus) of peer-peer national competition in the global maritime domain, coupled with the accelerating development of new generations of lethal naval weapons (missiles, long range guided projectiles from guns, directed energy, and non-kinetic cyber weapons), as well as related radar, sensor and control systems, all focus attention on the next frigates and destroyers. Navies worldwide continue to concentrate most of their investments in these next generation surface combatants.
The highest interest is understandably in new designs and construction surface combatant programs, such as the U.S. Navy’s new class of guided missile frigate (FFG-X), as well as the newest generation of surface combatants in Australia and Canada (SEA 5000 and CSC respectively). Awards are expected for all three programs in 2018.
Yet the cost of new construction frigates and destroyers remain challenging for many navies. The continuing pressure to respond to a growing demand for high end naval capability with shrinking fleets (in most NATO and many Asian-Pacific states) drives many sea services to look to modernizing their frigate and destroyer fleets to stretch ship numbers as far as possible.
Two recent news bits serves to illustrate recent developments the surface combatant modernization market.
First, in December 2017, the New Zealand Defence Minister announced that a revised contract with Lockheed Martin Canada for the installation phase of the Anzac Frigate Systems Upgrade (FSU) project is now budgeted for US$639M, up about 30% from the original contract in 2014.
Put in context, this represents the value of one high end multi-mission frigate, or perhaps two to three corvettes or offshore patrol vessels (OPVs).
Second, reporting in December on internal U.S. Navy assessments state the service does not plan to reactivate the Oliver Hazard Perry (FFG-7) class frigates to help fill gaps in the current surface fleet force structure. We assess that the remaining inactive ships will be released as Excess Defense Articles (EDA) and transferred to international navies, following previous Perry-class frigates which continue be highly sought after.
Here is where AMI helps put isolated reports in context. A quick snapshot of AMI reporting on destroyers and frigates now in service across the globe:
Destroyers
Frigates
- Country
- Ships
- US
- 66
- China
- 41
- Japan
- 39
- Taiwan
- 20
- China
- 25
- US
- 19
- Russia
- 14
- Russia
- 16
- India
- 12
- Turkey
- 15
- France
- 10
- S Korea
- 15
- S Korea
- 9
- India
- 14
- Top 7
- 175
- Italy
- 14
- Worldwide
- 191
- Top 8
- 154
- Percent of Total
- 92%
- Worldwide
- 411
- Percent of Total
- 37%
A couple of quick takeaways:
- There are roughly twice as many frigates as destroyers in service, and the operators of frigates are much less concentrated than those of destroyers, where 92% of the current fleet (by hull count) is found in seven navies. Only five of those are considered accessible markets to most of our customers.
- Therefore the frigate refit market, with weapons, sensors and combat systems typically less complex and more numerous than destroyer counterparts, represents a broader and more addressable market for a wider range of products and services.
- This just touches the surface of AMI’s insight into frigate and destroyer modernization opportunities. Aged analysis of fleet structures, detailed insight into current systems and weapons fits are where we make a difference.
- We understand that the refit market is critical for many of our customers, and our market intelligence products and consulting services are designed to provide the same level of actionable insight on it as we do for new construction opportunities.
As always, we seek your feedback and look forward to continuing to help guide market assessment, strategy, capture in the modernization market.