The South Korean Shipping industry has been dealt an intensive blow due to cancellations and a significant reduction in orders. The drop in oil prices in the last few years and the overall downward trend of the global economy has not helped their plight.
These shipyards are employing techniques such as sending their workers on unpaid leave and shutting down idled dry docks to deal with losses.
According to Yonhap News, “For decades, the shipbuilding sector has been one of the key growth drivers for Asia’s fourth-largest economy. South Korea is home to Hyundai Heavy and two other top ranked shipyards — Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. But they suffered a steep fall in new orders and faced cancellations for the past few years due to low oil prices and a downturn in the global economy, forcing them to cut costs through workforce reductions and asset sales.”
The source added, “Samsung Heavy, closed down two docks, including one floating dock, in the face of a decline in new orders. Another troubled shipyard, Daewoo Shipbuilding, is also tinkering with a move to sell an additional dry dock. Last year, it sold two of them.”
Since 2008, South Korean shipbuilders have suffered due to major financial strain. The global economic crisis resulted in new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.
However, entering this year, local shipyards bagged more new orders than expected. Hyundai Heavy and its affiliates have secured a series of new contracts, with their new orders reaching USD 4.2 billion to build 72 ships in the first six months of the year.
According to industry sources, their first-half orders represent a whopping increase from a meagre USD 1 billion and 13 vessels a year earlier.