Chinese shipyards snatched 65% of orders from South Korean ship owners!
2017-05-24 09:00
Chinese shipyards snatched 65% of new ship orders from South Korean ship owners this year! Recently, the South Korean shipping industry has begun to gradually recover, and major South Korean shipping companies have successively placed orders for new ships. However, these South Korean shipping companies have "ignored" the struggling South Korean shipbuilding industry and instead chosen to order new ships from Chinese shipyards, a phenomenon that has attracted considerable attention from South Korean industry insiders.
Chinese shipyards received 65% of orders from South Korean ship owners this year.
Clarksons' data shows that as of May 15, South Korean shipping companies had placed orders for a total of 20 new ships this year. However, only 7 of these new ship orders were received by South Korean shipbuilders, while the remaining 13 were built by Chinese shipbuilders, accounting for 65%.
In contrast, during this period, all 16 new ship orders placed by Chinese shipping companies were received by Chinese shipbuilders; of the 6 new ship orders placed by Japanese shipping companies, 4 were received by Japanese shipbuilders, accounting for 67%.
In the same period last year, South Korean shipping companies placed a total of 26 new ship orders, of which 22 were placed with South Korean shipbuilders, accounting for 84%. This year, however, the number of orders placed by South Korean shipping companies with local shipbuilders has decreased significantly.
Among them, the largest dry bulk shipping company in South Korea, Pan Ocean, placed the most new ship orders with Chinese shipbuilders this year, in New Yangzi Shipbuilding placed orders for 5 63,000-dwt open-top wood chip carriers, with a total value of approximately US$146 million. Since the beginning of this year, Daewoo Shipping & Marine has ordered 6 81,200-dwt bulk carriers ，of which 4 were received by China Shipbuilding CSSC Chengxi with a value of approximately US$98 million. In addition, Samsung C&T placed orders for 4 13,000-dwt deck carriers at Wuchang Shipbuilding Industry 。
Image: On May 11, China Shipbuilding CSSC Chengxi signed a contract with Daewoo Shipping & Marine for the construction of 4 81,200-ton bulk carriers.
A 20% Price Gap: Chinese Shipbuilders Show Clear Competitive Advantage
Regarding South Korean ship owners choosing Chinese shipyards, South Korean shipping industry insiders pointed out that South Korean shipbuilders rarely undertake bulk carrier orders, and the construction prices of Chinese shipbuilders are usually 10% to 20% lower than those of South Korean shipbuilders. In comparison, Chinese shipbuilders have a clear competitive advantage, which is why South Korean ship owners choose to order ships from Chinese shipyards. In addition, South Korean domestic shipbuilders have focused on building LPG carriers 、ultra-large container ships and other high value-added vessels, which is why ship owners have turned to overseas shipyards.
This person said that for South Korean shipping companies, the price difference of about 20% between Chinese and South Korean shipbuilders is difficult to ignore. However, the problem is that the price competitiveness of Chinese shipbuilders comes not only from labor costs, but also from policy support provided by the Chinese government, such as providing financing equivalent to up to 90% of the shipbuilding amount and a series of financial policies. At the same time, most of the major South Korean shipbuilders are under the management of creditors and have to abide by strict order acceptance guidelines, making it impossible to accept low-price orders.
In addition, the utilization rate of South Korean shipping companies by domestic cargo owners is only about 20%, while the utilization rate of Japanese domestic cargo owners for domestic shipping companies is as high as 60%, and the Chinese government even adopts policies such as ship demolition subsidies to directly support the shipbuilding industry.
Call for South Korean Government to Subsidize Shipbuilders and Allow Low-Price Orders
South Korean shipping industry insiders said that it is impossible to place orders for ships with higher-priced South Korean shipbuilders. In response, insiders from major South Korean shipbuilders said that under the current severe market conditions, different measures need to be taken to allow shipbuilders to accept low-price orders. For shipyards, accepting low-price orders can temporarily maintain the minimum level of equipment and personnel expenses.
This person said that in recent years, South Korea's domestic small and medium-sized shipbuilders have basically disappeared, and there are no companies that can undertake orders from South Korean ship owners, which is indeed a major problem. If South Korea's major small and medium-sized shipbuilders go bankrupt, the obvious beneficiary will be Chinese shipbuilders, so it is hoped that the South Korean government will also provide subsidies for shipbuilding costs.
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