South Korea is sounding the alarm after new data shows the shipbuilding industry falling to its lowest market share since the market downturn in the mid-2010s. The loss in share comes as China is moving aggressively to expand its shipbuilding capacity and expand into higher-value sectors of shipbuilding.
The alarm was raised after Clarksons Research released its monthly and year-to-date data on shipbuilding orders. Media reports have been highlighting a steady decline in South Korea’s shipbuilding orders and the decline in market share. However, based on year-to-date numbers from Clarksons, it now appears South Korea will have less than a 20 percent market share for 2024.
The Korean shipbuilders dominated the order flow topping out at 44 percent in 2018 as the industry recovered from a global downturn. The downturn drove many Chinese shipbuilders into bankruptcy while the industry consolidated at China State Shipbuilding Corporation and China Shipbuilding Industry Corporation. The two state-run corporations recently announced plans to further consolidate and simplify their corporate structure to support further growth.
South Korea which had been holding in the 30 percent market share range and previously topped its Chinese rivals for some months has more recently seen a steady decline. At 20 percent of the orderbook, it would be the lowest point since 2016. South Korea now stands at 18 percent of orders to China’s 69 percent of the orderbook. During the industry downturn in 2016, South Korea dropped to 15.5 percent of the orderbook.
Media reports in South Korea also highlight it is the largest-ever gap between China and South Korea. In 2024, according to the Clarksons data, South Korea has booked just over 1 million compensated gross tons (CGT). This compares with nearly 4.2 million CGT for the Chinese shipbuilders.
The slip comes despite what the South Koreans are calling another strong year for orders. For example, at the end of November, HD Hyundai reported its shipbuilding group was over 152 percent of its annual order target of $13.5 billion. Hyundai’s Korea Shipbuilding & Offshore Engineering has received orders for 181 ships this year valued at over $20.5 billion. Most of the orders however are for gas carriers followed by a smaller number of containerships and just a few tankers. South Korea focusing on high-value ships has already abandoned the market for bulkers and other basic ship types. South Korea’s largest shipbuilders have a three-year backlog and limited availability for building slots.
South Korea’s strategy supported by the government is selective order recruitment and focusing on developing next-generation shipping. The industry is investing in alternative fuel ships including receiving some of the first orders from ammonia vessels. It is also moving forward aggressively with technology and autonomous shipping.
China is expanding its shipbuilding capacity. Several of the yards that closed a decade or more ago have announced restarts and booked their first orders. At the same time, China made inroads into the LNG sector attractive for example major orders linked to QatarEnergy’s fleet expansion.
Experts point to the need for South Korea to support its mid-sized and smaller shipyards and the opportunities for partnerships. Hanwha Ocean has been pushing forward to strengthen ties with the United States including the U.S. Navy. It has won its first USN maintenance assignments and has agreed to buy Philly Shipyard pending final U.S. approval.
