On the afternoon of the 12th, at the Daehan Shipbuilding yard in Haenam, Jeonnam Gwangju Integrated Special City, a sleekly curved block, like a shark's severed tail, was being brought in on a barge. It will become the stern of a Suezmax crude oil tanker measuring 274 meters long, 48 meters wide, and 23.6 meters high. About 118 such blocks are joined together to make one ship. Daehan Shipbuilding makes all these blocks in-house, without outsourcing, at its Yeongam inshore plant about 22 kilometers from the shipyard. With three years of orders backlogged, three to five blocks cross from Daebul Port to Haenam each day, timed to the tide.
An employee who has worked at Daehan Shipbuilding for 21 years said, "I even come in on Saturdays to get ahead of schedule and finish work before the delivery date," and noted, "Compared to the past when we had no choice but to take low-priced orders even though we knew they were poison, it feels like a world of difference." That day, at the Haenam yard and the quay (a structure built to berth ships), construction projects for six Suezmax crude oil tankers and shuttle tankers were underway at the same time.
◇ Reshaping with Suezmax… optimizing the production process
Daehan Shipbuilding expanded by consecutively building large bulk carriers during the shipbuilding boom of the 2000s but was hit hard by the 2008 global financial crisis. Over the following 11 years, through Daewoo Shipbuilding & Marine Engineering's consignment management, a rehabilitation process, and oversight by Korea Development Bank, it sought a lifeline in mid- to large-sized crude oil tankers and shuttle tankers instead of bulk carriers, where cutthroat competition with China was intense. After bringing on specialized investment firm KHI as the new owner in 2022, it set "selection and concentration" as its principle, repeatedly building Suezmax tankers to fit its limited production facilities.
A Suezmax is a large tanker designed to pass through the Suez Canal at full load, typically carrying 150,000 to 160,000 tons of crude. It is widely used for medium- to long-haul crude transport because it can carry a large volume at once while still calling at a relatively wide range of ports.
Word spread among shipowners that it is a shipyard specialized in Suezmaxes, pushing cumulative orders up to 55 vessels. This year alone, it has won 17 new orders and is vying for first or second place in the global Suezmax market with China's Hengli Heavy Industries. From block fabrication at Inshore Plants 1 and 2 to large-block assembly, pre-outfitting, and dock loading, key processes have been aligned to the rotation cycle of the 460-meter dock (shipbuilding dock) to function like a single production line.
The in-house production rate has also been raised to the 97% range. As the strategy of focusing on Suezmaxes created a virtuous cycle, in the second quarter this year Daehan Shipbuilding posted 354.4 billion won in revenue and 95.2 billion won in operating profit. The operating margin was an unusual 26.9% for shipbuilding.
At Daehan Shipbuilding, which has only one dock, dock turnover determines output and revenue. That is why the company brings forward as many processes as possible before entering the dock. The 118 blocks made in Yeongam do not go straight into the dock upon arrival in Haenam. In a land-based work area next to the dock, two to four blocks are pre-joined to create about 35 ultra-large blocks. No matter how big a block is made outside the dock, it is useless without a crane to lift it. With a 1,500-ton goliath crane—the second-highest load capacity among Korean shipyards—the company mounts the large blocks as they are, minimizing butt-matching and welding work inside the dock.
◇ Improving productivity to pick orders… exploring expansion
From this dock, one Suezmax is launched every four weeks. Until early this year, the interval was 4.5 weeks. By changing the block installation sequence to start the engine room process first and bringing forward pre-outfitting and painting, the company shaved off 0.5 weeks. Cutting three days created capacity to build one more ship per year. It filled the newly secured 2028 and 2029 construction slots with one additional Suezmax each. That will add roughly 130 billion won in annual revenue.
That day, the 460-meter space in the dock was packed, with a Suezmax shuttle tanker and about two-thirds of a crude tanker hull being built front to back in parallel. This is a tandem method: after launching the front ship, the hull under construction in the rear is moved forward, and the next ship begins in the vacated space. If processes slip by even a few days, it is hard to meet the four-week cycle, so the weather one to two weeks out is also checked in advance. If strong winds are expected, goliath crane work is brought forward to overtime or weekends. A Daehan Shipbuilding official said, "Many shipyards use tandem construction to build multiple ships simultaneously in a single dock, but it is rare to launch Suezmax-class vessels at four-week intervals," adding, "We have continuously raised productivity through repetitive construction."
A focus on Suezmax construction has also given the company more room to maneuver. Repeatedly winning the same hull form has reduced design time and expense and allowed the company to reflect shipowner-specific requirements. The number of clients has grown from five four years ago to 14 now. Market conditions are still supportive. After the U.S.-Iran war and the closure of the Strait of Hormuz, Asia's crude procurement sources widened to the United States, Brazil, and Canada, lengthening sailing distances. More ships are needed to move the same volume of crude, and demand to replace aging vessels has overlapped. Global Suezmax orders reached 70 ships in the first half of this year, up 218% from 22 in the same period a year earlier. Daehan Shipbuilding is now choosing shipowners who offer higher prices.
However, there is a limit to growth by tightly cycling just one dock. With current facilities, Daehan Shipbuilding's maximum annual revenue is about 1.5 trillion won, about 22% higher than last year's revenue (1.2281 trillion won). To scale further, construction space must increase. Daehan Shipbuilding is reviewing capacity expansion, weighing options such as an additional dry dock, a floating dock, and land-based construction. It is also preparing the next high-margin ship type in case the Suezmax market cools. This year it completed development of an 88,000-cubic-meter very large gas carrier (VLGC) design and is weighing the timing for full-scale sales by comparing profitability with Suezmaxes.