Overseas shipyards partnering with HD Hyundai are delivering results as they notch successive orders. Leading with the success of HD Hyundai Vietnam Shipbuilding, HD Hyundai is expanding joint-venture shipyards in Saudi Arabia, the Philippines, India, and elsewhere. HD Hyundai is cooperating with each country's shipbuilding revival plans to develop new markets while working to reclaim the commercial ship market lost to China.
On the 25th, the shipbuilding industry said Cochin Shipyard Limited of India, which has a long-term partnership with HD Hyundai, signed a letter of intent with France's CMA CGM Group to build six 1,700 TEU (1 TEU equals one 20-foot container) dual-fuel small container carriers (feeder vessels).
The price is about $50 million per ship, for a total of $300 million (about 430 billion won). HD Hyundai Heavy Industries will participate as a technical cooperation partner in building the vessels, supporting design and procurement and taking a portion of the revenue.
The IMI (International Maritime Industries) shipyard in Saudi Arabia, in which HD Hyundai invested, also secured its first order by signing a contract with the state-run shipping company Bahri to build six 62,823 DWT (deadweight tonnage, the maximum cargo tonnage a ship can carry) bulk carriers.
The contract is worth 280 billion won, and the ships are scheduled to be delivered sequentially between 2028 and 2029. IMI was established in 2017 through a joint investment by HD Hyundai (20%), Saudi state-run corporations Aramco, Bahri, and Lamprell.
HD Hyundai also plans to begin shipbuilding at the Subic shipyard in the Philippines starting in the fourth quarter of this year. The Subic shipyard was formerly owned by Hanjin Heavy Industries (now HJ Shipbuilding & Construction) but changed hands to a U.S. private equity fund after it went bankrupt in 2019. HD Hyundai plans to lease it for 10 years to build medium- to large-size tankers.
HD Hyundai is also preparing a joint submarine development project in cooperation with Peru's SIMA shipyard and is close to signing the main contract, and it participated in the bidding for the right to operate the Casablanca shipyard in Morocco.
In the industry, HD Hyundai's overseas expansion is seen as a strategy to secure new markets and boost price competitiveness for commercial ships that has been eroded by China. Domestic shipbuilders, with higher labor costs than China, are seeing their container ship order share gradually decline.
For 24,000 TEU-class container carriers, domestic shipyards' ship new building price is around $270 million, while China's is about 13% lower at around $235 million. As they lose on price competitiveness, domestic shipbuilders won 32% of the container ships ordered worldwide in 2022, but their share fell to 25% in January–September this year. Over the same period, China's share rose from 60% to 71%.
Although labor costs in countries such as Vietnam and the Philippines are low, some say overseas markets differ from Korea in labor conditions, making technology transfer and other efforts challenging. In the past, Samsung Heavy Industries and Hanjin Heavy Industries also secured overseas shipyards but withdrew due to frequent delivery delays and defects.
Kim Myeong-hyeon, a professor in the Department of Naval Architecture and Ocean Engineering at Pusan National University, said, "Utilizing shipyards in Vietnam, the Philippines, and India could secure a certain level of price competitiveness," but added, "Given past failures, success will depend on handling cultural and environmental aspects, including labor conditions, well."