Korean shipbuilders are being credited with taking the lead over Chinese firms in the order race by emphasizing precise on-time delivery and fast shipbuilding capabilities.
According to the shipbuilding industry on the 3rd, HD Korea Shipbuilding & Offshore Engineering delivered 96 ships, or 70.6% of the 136 ships handed over last year, ahead of schedule. The company's early delivery rate fell from 40.4% in 2023 to 35.4% in 2024, but rose sharply last year.
An HD Hyundai official said, "We verified every production process at worksites step by step and advanced our process model," and noted, "Thanks to higher productivity and efficiency, we have recently shortened shipbuilding times."
Fast ship delivery by Korean shipbuilders is seen as a powerful weapon in the fiercely competitive global shipbuilding market. An industry source said, "In the past, the same shipowner placed an order for the same ship in China first and then in Korea a year later, but Korea actually built and delivered it a year earlier than China."
As ocean freight rates have been falling recently, Korean shipbuilders' rapid construction capability is standing out even more as an advantage. When rates are low, shipowners want to take delivery of ships as quickly as possible and operate many vessels to increase revenue.
The Shanghai Containerized Freight Index (SCFI), a route freight index based in Shanghai, stood at 1,457.86 as of the 23rd of last month. That is down 28.7% from the same period a year earlier (2,045.45). If transit through the Suez Canal resumes this year, rates are expected to fall further. As cargo volume keeps growing, shipowners are demanding on-time delivery and fast handover.
Fast ship delivery is translating into better results. Hanwha Ocean delivered its second wind turbine installation vessel (WTIV) to Denmark's offshore wind company Cadeler one month earlier than the original contract at the end of last year and received an additional $4.5 million (about 6.4 billion won).
Shipbuilding contracts between shipyards and shipowners generally specify liquidated damages for construction delays. If delivery is late, a penalty equal to one-thousandth of the ship price per day is imposed. By contrast, early delivery often earns incentives.
Korean shipbuilders can build ships earlier than overseas rivals thanks to long-accumulated experience operating docks (dock: shipbuilding facilities).
HD Hyundai Heavy Industries builds ships in a total of nine docks. It calculates the process progress rate of ship blocks produced in each dock to create a dock status chart and minimize wasted time and expense. It also uses the tandem method (simultaneous construction technique), which utilizes 30–40 meters of space between ship blocks in a full dock to carry out additional block work.
Kwon Hyo-jae, a researcher at the Seoul National University Institute of Marine Systems Engineering, said, "Inserting a new ship schedule between slots is a simultaneous task that requires rushing drawings and even material orders," and added, "Only Korean shipyards with advanced technical prowess and seasoned work experience can carry it out."
An industry source said, "Korean shipyards have many skilled workers with years of experience, so the level of manual work is high, and they excel at building ships by responding proactively to various situations," and added, "Even if Chinese firms equip themselves with advanced automation, there are still many areas where they cannot catch up yet."