China Gains Deal to Build 9 Ultra Large Container Ships, Korean Shipping Industry in Shock

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Image Courtesy: CMA CGM

In the 25th year of their diplomatic relations, the competition between China and South Korea intensified after the former gained the world’s largest container ship deals.

On 20th August, shipbuilding industry sources reported that France’s CMA CGM signed a letter of intent (LOI) to build nine 22,000 TEU container ships with two Chinese shipyards, Hudong-Zhonghua Shipyard and Shanghai Waigaoqiao Shipbuilding. Participating in the same bid were South Korea’s three big shipbuilders, Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering. However, the Chinese won the deal for USD 1.44 billion.

The loss was unexpected as with stricter international regulations on the emission from ships, including sulfur oxides, domestic shipbuilders expected to win new orders of ultra large and eco-friendly high value added ships. The deal encompasses building ships which have dual-fuel propulsion systems that can operate on either liquefied natural gas or fuel oil. The concern is that an industry already reeling under a lack of business could lag behind Chinese firms in the future.

Domestic shipbuilders won the deal of 2.83 million CGT in the first half of this year but fell behind China with 133 ships or 2.9 million CGT. An official from the shipbuilding industry said, “even foreign container shippers have admitted that Chinese shipyards’ technology and price competitiveness have caught up with Korea. South Korean shipbuilders used to rank first to seventh in the top 10 list. However, only big three made the top 10 list now with many Chinese and Japanese firms included.”

Source: Business Korea