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South Korea aims to dominate shipbuilding within decade

The government has set a target for the country's shipbuilders to take 75% and 55% of market share in eco-friendly vessels and autonomous ships, respectively, by 2030

The aspirational state strategy is likely to hit a nerve at the other two top shipbuilding nations nearby. Seoul and Tokyo are still locked in a dispute about government subsidies at the World Trade Organisation 

SOUTH Korea has drawn up ambitious goals for its shipbuilding sector, which it expects to achieve dominance within the next decade.

A new blueprint issued by the country this week is likely to hit a nerve in China and Japan, the other two top shipbuilding nations in the world.

South Korea’s Ministry of Trade, Industry and Energy has set a target for shipbuilders to take up to 75% of the market share for eco-friendly vessels with less or no carbon emissions by 2030, up from 66% today.

It also aims for a 50% share within the same time frame for autonomous ships, a market that has yet to be established.

“We will strengthen the power of our shipbuilding industry and make it the overwhelming number one in the world that no one can match,” said President Moon Jae-in in a speech. “Our shipbuilding industry has achieved the highest order volume in 13 years this year and has regained its status as the world's best.

“Now is the time to make the shipbuilding industry stronger.”

The remarks come as the sector is enjoying a strong rebound this year, with an upsurge of newbuilding orders, making shipyards in South Korea one of the largest beneficiaries.

For the first eight months of 2021, they together won orders for 329 ships or 13.7m in cgt terms, nearly sixfold the tonnage contracted during the year-ago period, according to Clarksons data.

But the race against China for the position of being top dog remains fierce.

China’s yards bagged 526 ships of 14.5m cgt. That equals a 45% global market share versus the 42% snatched up by its competitors in South Korea.

That said, technological expertise and experience in building gas carriers have enabled the South Korean builders to grab commanding heights when it comes to clinching deals for dual-fuel ships.  

Between January to June of this year, they struck deals to construct 4.8m cgt of fresh tonnage that can run on alternative fuels, accounting for 70.1% of the world total.

Hyundai Heavy Industries, one of the leading players, was recently selected by Maersk for its blockbuster orders for dual-fuel methanol boxships

With stricter global shipping emission requirements on the horizon, the rivalry between the two countries, which both see shipbuilding as a strategically important industry, are only expected to intensify when it comes to the subject of building carbon-free or carbon-neutral vessels.

A study by the Getting to Zero Coalition in March suggested that zero-carbon fuels needed to account for 5% of international shipping’s fuel mix if the sector were to reach its decarbonisation targets by 2050.

In addition to the newbuildings, Seoul’s vision also includes plans to train 8,000 shipbuilding technicians by next year and increase the country’s overall yard productivity by 30% by 2030 via the application of digital technology and the development of smart shipyards.

The government will offer recruitment incentives to companies that re-employ retirees for up to eight months.

Although few detailed supportive policies were disclosed, the state strategy is likely to be ambitious enough to reignite the worries of some shipbuilding nations, such as Japan, over unsolved competition issues.

Japan itself is hoping to benefit from the latest green ship wave with its technological advantages.

But it has been taking issue with Seoul’s policies over the past years, citing excessive state support, which leads to a distortion of market competition and puts Japanese yards at a disadvantage.

Japan has taken its dispute with South Korea regarding shipbuilding subsidies to the World Trade Organisation, with a resolution still left hanging in the air. 

Other members of the Organisation for Economic Co-operation and Development Working Party on Shipbuilding have expressed similar concerns, with their attempts to introduce a new competition regime resisted by South Korea, also a member state.

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