Shipbuilding and Repair

South Korea

Malcolm Latarche
Malcolm Latarche

14 May 2019

South Korea

In the boom years of shipbuilding between 2004 and 2008, it seemed that South Korean builders could do no wrong, having seen off the EU’s complaints of unfair subsidising by the South Korean government. It was around this time that South Korea overtook Japan as world leader – a position it would keep for just six years.

While happily letting China snap up orders for bulkers and tankers, South Korea concentrated on the LNG carrier and container ship sectors which were more lucrative. Builders such as Hyundai, Daewoo and STX also sought expansion outside of South Korea, establishing joint ventures around the globe and even taking over shipyards in Europe, including France’s premier builder Chantiers de l’Atlantique and Finland’s Aker Yards. The latter two gave South Korean builders a share in the cruise ship sector which they had not been able to penetrate on their home ground.

As the offshore sector took off, so South Korean yards also acquired ownership of some of Norway’s specialist builders, again from Aker Yards. Following the crash of 2008, it was targeting offshore which was at the time the only profitable sector that kept South Korean yards busy and winning major orders. That rich seam of business came to an end in 2014, sending South Korea’s builders into a swift decline.


There have since been some notable casualties: STX has been obliged to offload its foreign operations, Hanjin has virtually collapsed and is on life support and Daewoo has this year been acquired by Hyundai with the blessing of the South Korean government and banking sector. In propping up ailing builders, South Korea has once again been accused of unfair competition and is the subject of action by Japan and the EU at the WTO.

The travails of STX, Hanjin and now Daewoo mean that South Korea’s big five builders have been effectively reduced to just two: Samsung and Hyundai, which has always operated its subsidiaries Samho and Mipo as separate entities from the main Hyundai Heavy.

As well as the major players, South Korea also has a contingent of smaller yards which have also experienced mixed fortunes. SPP became a casualty in 2017 and others that have delivered vessels over the past five years no longer have any ships on their orderbooks.

Things have looked quite black for South Korean builders since 2016 although a number of wins for LNG carriers, large container ships and tankers have occurred recently. Arguably the most innovative ships being built currently are the tankers for AET and Teekay at Samsung, which will feature a system whereby VOCs from the cargo are recovered and used as fuel. The Teekay ships also feature a hybrid propulsion system incorporating battery technology.