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With Korean yards struggling to stick to production schedules this year and projected to be working beyond their design capacity in 2024, the biggest names in the sector are readying to pull the trigger on overseas expansion plans not seen since the previous yard boom 15 years ago. The nation’s dominant top three yards, HD Hyundai Heavy Industries, Samsung Heavy Industries and Hanwha Ocean, are sitting on record orderbooks, stretching out for the following four years. With limited labour availability at home, the three yards are now actively pursuing overseas production bases for the first time since 2008. Hanwha Ocean, formerly called Daewoo Shipbuilding & Marine Engineering, established this month a holding company in the US to acquire shipyards in North America. HD Hyundai Heavy is also looking at overseas acquisitions to go alongside existing foreign yard set-ups it has in Vietnam and the Middle East while Samsung Heavy, which had block production bases in Asia during previous booms, is on the hunt for foreign yards to help with its record backlog of ships. Global shipyard forward cover over the last year has hit the highest levels since back in 2009 following the historic ordering boom from 2006 to 2008, according to data from Clarksons Research, which estimated this month, despite some yard reactivation seen over the past year, current global shipyard capacity is around 35% down from its 2010/11 peak. Yard utilisation in South Korea will stand at 107% next year Danish Ship Finance published its influential biannual shipping markets report this month in which it analysed the current full capacity utilisation at South Korean yards. Danish Ship Finance is forecasting yard utilisation in South Korea will stand at 107% next year. In terms of where Korean yards may aim to buy, Danish Ship Finance gave an impression of easy pickings in terms of targets with many other yards struggling around the world. Danish Ship Finance data suggests a remarkable 231 of the top 300 yards around the world are at risk of delivering their last orders before the end of 2025. Thomas Bracewell, director of newbuildings at brokers Arrow, said there were two firm reasons for Korean yards to mull commercially driven expansion, despite being burnt from the collapse in shipbuilding fortunes post the global financial crisis. “We need to see shipbuilder production capacity expansion over the next decade to handle fleet replacement,” Bracewell said, adding that Korean yards have significant engineering capacity and production experience but are running out of domestic cost-effective labour. Exporting their engineering knowledge overseas is a necessity for their survival “Exporting their engineering knowledge overseas is a necessity for their survival,” Bracewell said, pointing towards Hyundai Vietnam Shipbuilding (pictured) as a case study for success. Commenting on the likely Korean expansion overseas, Mark Williams, managing director of UK-based consultancy Shipping Strategy, told Splash Extra: “Global newbuilding demand is in excess of shipyard capacity, hence the three to four year year lead times for delivery. The energy transition will increase fleet renewal pressure.” Williams said expansion made sense if yards can control costs, stressing: “Local partnership will be a vital component.” The Review of Maritime Transport 2023, published in September by the United Nations Conference on Trade and Development (UNCTAD), urged shipyards to expand quickly to aid with shipping’s green transition. “Shipyard capacity is currently facing constraints. Tanker and dry bulk owners are anticipating long waiting times and high building prices. Increasing shipbuilding capacity is crucial to ensure that shipping meets global demand and its sustainability goals,” the UNCTAD report stated.

Korean yards ready overseas expansion

Maxed out at home, South Korea’s top shipbuilders are about to invest in foreign production facilities.

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