Korean shipbuilders are being credited with pulling ahead of Chinese rivals in the race for orders by stressing precise on-time delivery and fast shipbuilding capability.
According to the shipbuilding industry on Feb. 3, HD Korea Shipbuilding & Offshore Engineering delivered 96 ships, or 70.6% of the 136 ships delivered last year (built by HD Hyundai Heavy Industries and HD Hyundai Samho), 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 the worksite step by step and advanced the process model,” and noted, “Thanks to improved productivity and efficiency, we have recently shortened shipbuilding periods.”
Fast delivery by Korean shipbuilders is cited as a powerful weapon in the fiercely competitive global shipbuilding market. An industry official said, “In the past, the same shipowner first placed an order for the same ship in China and then placed an order with a Korean shipbuilder a year later, but Korea actually built and delivered it a year earlier than China.”
As ocean freight rates have fallen recently, Korean shipbuilders’ fast construction capability is standing out even more as an advantage. When rates are low, shipowners want to take delivery as quickly as possible and operate as many ships as they can 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. Because cargo volume keeps increasing, shipowners are demanding on-time delivery and fast handover.
Fast ship delivery is feeding through to better earnings. Hanwha Ocean delivered the second wind turbine installation vessel (WTIV) to Danish 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 later than the due date, a penalty equal to 1/1000 of the ship price per day is paid. By contrast, early delivery of a ship often earns incentives.
Korean shipbuilders can build ships faster than overseas competitors thanks to long-accumulated experience operating docks (dock, a shipbuilding facility).
HD Hyundai Heavy Industries builds ships in a total of nine docks. It calculates the progress rate of ship blocks produced in each dock to draw up a line chart (a dock status chart) and minimize wasted time and expense. It also uses a tandem method (simultaneous construction) that carries out additional block work by using the 30–40 meters of space created between ship blocks in fully occupied docks.
Kwon Hyo-jae, a researcher at the Seoul National University Institute of Marine Systems Engineering, said, “Inserting a new ship schedule between slots is simultaneous work that requires urgently drawing blueprints and even ordering materials,” and added, “Only Korean shipyards with advanced technology and seasoned work experience can carry it out.”
An industry official said, “Korean shipyards have many skilled workers with long experience, so the level of manual workmanship is high, and their ability to build ships by responding proactively to various situations is also excellent,” and added, “Even if Chinese companies have highly automated facilities, there are still many areas where they cannot catch up.”
Source: ChosunBiz
