Korea's mid-tier shipbuilders are accelerating their entry into the high-value ship market on the back of a shipbuilding boom. As ship demand rises and construction slots at major shipyards get tight, shipowners are increasingly looking to mid-sized shipyards with delivery and price competitiveness. To seize this opportunity, mid-tier shipbuilders are expanding into gas carriers, high-efficiency tankers, and alternative-fuel ship designs, building on their experience constructing tankers (liquid cargo carriers) and container ships.
◇ Leveraging tanker strengths to enter gas carriers and high-efficiency ships
According to the shipbuilding industry on the 5th, Daehan Shipbuilding has focused on Suezmax crude oil carriers (the largest ships that can transit the Suez Canal) as its mainstay, but it is preparing to enter the very large liquefied petroleum gas carrier (VLGC) market, aiming to ramp up sales in the second half of this year.
Daehan Shipbuilding recently received basic approval from Lloyd's Register in the United Kingdom and the Korean Register for a conceptual design of an 88,000-cubic-meter-class VLGC. Basic approval is the first-step verification that a ship's conceptual design meets classification society rules and safety standards.
A Daehan Shipbuilding official said, "Based on our tanker competitiveness, we believe we have secured our order backlog on a stable footing, and we are pursuing diversification of ship types—including shuttle tankers, mid-sized container ships, and gas carriers with added value—to expand sales," adding, "We are now accelerating follow-up development of VLGCs." Daehan Shipbuilding has so far won orders for 35 ships worth $3.3 billion, stockpiling about 3 years and 6 months of work.
Daehan Shipbuilding chose VLGCs as its new bet after weighing both market demand and construction efficiency. LNG carriers, which major domestic shipbuilders focus on, are representative high-value ships, but barriers to entry are high due to cargo containment technology and overseas licensing issues.
Instead of jumping straight into liquefied natural gas (LNG) carriers, Daehan Shipbuilding decided to first target VLGCs, where demand is expected to expand while improving production efficiency with current facilities. Considering beam and hull size, VLGCs are advantageous for simultaneously progressing multiple hulls at the Haenam Shipyard, which has a single dock (shipbuilding facility), leading the company to judge that this ship type can raise profitability.
K Shipbuilding Co., Ltd. is upgrading its core mid-sized tankers into multipurpose, high-efficiency ships. Last month, it received basic approval from the Korean Register for the design of a 74,000-ton product tanker applying "corrugated bulkheads."
Corrugated bulkheads simplify the internal structure of cargo tanks, reducing the burden of washing, inspection, and maintenance. They have mainly been used on ships of 50,000 tons or less, but K Shipbuilding Co., Ltd. expanded the application scope to 74,000 tons in this design. Because it can carry both petroleum and chemical products, shipowners gain greater flexibility in cargo operations.
◇ Adding eco-friendly specifications to expand selective orders
Mid-tier shipbuilders are also developing technologies to meet environmental regulations as a competitiveness lever for orders. K Shipbuilding Co., Ltd. is jointly developing a 22,000-cubic-meter LNG bunkering vessel with DongHwa Entec and Lloyd's Register. It is also developing a tanker that applies a wind-assisted propulsion system with a Spanish company, among others.
Daehan Shipbuilding is also developing an air lubrication system with a British eco-technology company that creates an air layer on the hull bottom to reduce frictional resistance. The move aims to enhance the commercial appeal of existing merchant ships by adding features that can cut fuel costs and carbon emissions.
HJ Shipbuilding & Construction likewise is broadening shipowner options by adding biofuel and autonomous navigation specifications to existing container ships. In early this month, HJ Shipbuilding & Construction received basic approval from the Korean Register for a 10,000-TEU biofuel-propelled container ship design. By applying a biofuel propulsion system to existing container ships, it secured a ship model that can address carbon emission regulations. It also formed a partnership with Avikus, HD Hyundai's autonomous navigation subsidiary, to standard-equip autonomous navigation solutions on merchant ships built by HJ Shipbuilding & Construction.
Mid-tier shipbuilders plan to strengthen their policy of selective ordering based on the development of new ship types and eco-friendly technologies. While major shipbuilders are filling slots mainly with large, high-priced ships such as LNG carriers and ultra-large container ships, replacement demand for aging ships and compliance with environmental regulations continue in the mid-sized tanker and container ship markets. Mid-tier shipbuilders aim to expand their order scope to ships with higher per-hull prices and profitability by adding eco-friendly, high-efficiency specifications to ship types that can be built with their existing facilities and workforce.
An industry official said, "For mid-tier shipbuilders to translate development of new ship types into increased sales, they still need to prove shipowner acquisition, on-time delivery, and cost control through repeat builds," but added, "Given this unusual boom in which shipowners are paying close attention to mid-tier shipbuilders because of delivery and price, speed in converting design approvals into actual orders and construction performance is critical."