For the first time! China's shipbuilding industry surpasses the combined total of Japan and South Korea in three major indicators

In 2022, Chinese shipyards surpassed Japanese and South Korean shipbuilders in order intake, completion, and backlog for the first time. In response, South Korea's shipbuilding industry, having "given up" on competing with China for the top spot, has lowered its order targets, hoping to focus on high-value-added vessels like LNG carriers as a "last stand" through "selective order taking".

In 2022, Chinese shipyards accounted for 47% of the global market share, exceeding the combined share of Japan and South Korea.

A recent report by the Baltic and International Maritime Council (BIMCO) indicates that Chinese shipyards captured a 47% global market share in 2022, surpassing the combined share of Japan and South Korea. Twenty years ago, Chinese shipyards held less than 10% of the market share, but after significant capacity expansion in the 2000s, China became the world's largest shipbuilding nation by 2009.

BIMCO stated that in 2022, Chinese shipyards delivered a total of 14.6 million CGT of new vessels, while global deliveries totaled 30.8 million CGT. In comparison, Japan and South Korea, the other two major shipbuilding nations, delivered 4.8 million CGT and 7.8 million CGT, respectively.

Simultaneously, Chinese shipyards also secured more new vessel orders in 2022 than Japan and South Korea combined. According to Clarkson's statistics, global new vessel orders in 2022 totaled 42.78 million CGT, with Chinese shipyards accounting for 20.8 million CGT (49%), South Korea 16.3 million CGT (38%), and Japan 3.3 million CGT (8%).

In the coming years, Chinese shipyards are expected to maintain their leading position in new shipbuilding. Currently, the global order backlog stands at 190.1 million CGT, with Chinese shipyards holding 45% of the backlog, while South Korean and Japanese shipyards hold 34% and 10%, respectively.

BIMCO's chief shipping analyst, Niels Rasmussen, attributes the success of Chinese shipyards to their leading position in the dry bulk carrier sector and their recent establishment as the preferred builder of container ships. Chinese shipyards also hold significant orders for other vessel types but have yet to become a key player in the liquefied gas carrier sector.

Currently, LNG carriers represent the second-largest segment of the global order backlog, and South Korean shipyards remain the leaders in this area, holding 79% of the backlog. In contrast, Chinese shipyards currently hold only 15% of the LNG carrier backlog. However, Rasmussen believes that Chinese shipyards can make progress in this area, just as they gradually attracted orders for ultra-large container ships. In the short term, shipyards in other countries are unlikely to become competitors, and China, South Korea, and Japan are likely to maintain their nearly 90% market share.

Over the past year, Chinese shipyards have significantly increased their market share in the LNG carrier market. Clarkson's data shows that in 2022, Chinese shipbuilders secured orders for 59 LNG carriers (32% market share), while South Korean shipbuilders received orders for 122 LNG carriers (67% market share). Among them, Hudong-Zhonghua secured 38 orders, setting a record for the highest annual number of LNG carrier orders for a Chinese shipyard, with its market share jumping from less than 7% in 2021 to nearly 21.8%.

Despite the success of the Chinese shipbuilding industry, rising costs could threaten China's long-term position. Rasmussen notes that countries like Vietnam and the Philippines may become strong competitors in the future in search of lower costs; similar to how the center of the shipbuilding industry historically shifted from Europe to Japan, then to South Korea, and then to China.

Not competing on quantity but on price? South Korean shipyards lower order targets and "defend" the high value-added shipbuilding market.

Faced with the rapid development of Chinese shipyards, the South Korean shipbuilding industry seems to have abandoned the competition for market share, instead "defending" its advantage in the high value-added shipbuilding sector.

Korean media points out that although the overall order intake lagged behind China last year, South Korean shipyards have a unique presence in the high value-added, environmentally friendly shipbuilding market. According to the "2022 Analysis of South Korea's Shipbuilding Industry Order Volume and Global Order Share" released by the South Korean Ministry of Trade, Industry and Energy, South Korean shipyards had the highest order intake for high value-added vessels such as large LNG carriers, large container ships, and VLCCs last year. South Korean shipyards received orders for 149 vessels totaling 11.98 million CGT in this category, accounting for more than half of the global total of 270 vessels and 20.79 million CGT.

Since the beginning of this year, South Korean shipyards have been successfully securing orders for high value-added vessels. On January 17, Hyundai Heavy Industries Group's shipbuilding holding company, Korea Shipbuilding & Marine Engineering (KSOE), won a contract to build three 200,000-cubic-meter ultra-large LNG carriers. This was not only the company's and the South Korean shipbuilding industry's first order of the year, but also one of the first LNG carrier orders globally in 2023.