Hanwha wins $1.6 billion order to build 6 container ships for Evergreen
Korean shipbuilders are poised to capitalize on renewed demand for ultra-large container ships, analysts say
Hanwha Ocean CEO Kim Hee-chul (right) and Evergreen Chairman Chang Yen-I pose for a photo after signing a contract to build six LNG dual-fuel ultra-large container ships
Hanwha Ocean Co., a leading South Korean shipbuilder, said on Monday it has won a 2.33 trillion won ($1.61 billion) order to build six eco-friendly, ultra-large 24,000-TEU LNG dual-fuel container ships from Taiwan’s Evergreen Marine Corp.
The deal, amounting to 31.4% of Hanwha’s 2024 revenue, marks the company’s first large-size container ship order in nearly four years.
With the deal, analysts said Korea’s shipbuilding industry is making a resounding comeback in the segment, reclaiming ground that has been dominated by China.
Korean shipyards held near monopoly status in the large-size container ship segment between 2011 and 2017.
Officials from Hanwha Ocean and Evergreen Marine pose for a photo after signing a contract to build six LNG dual-fuel ultra-large container ships However, China's aggressive industrial policies under its Made in China 2025 initiative enabled its shipbuilders to gain significant market share by drastically slashing shipbuilding prices.
By 2021, Chinese shipyards surpassed their Korean counterparts in large-size container ship orders. Chinese firms had taken nearly full control of the sector by 2023.
“Chinese shipbuilders, supported by extensive government subsidies, could undercut prices, forcing Korean firms to pivot toward high-value segments like liquefied natural gas carriers,” said an executive at a Korean shipbuilding firm.
A container ship (Courtesy of Getty Images) CHANGING LANDSCAPE
The dynamics of the industry have shifted in South Korea’s favor.
Rising demand for container ships, driven by prolonged disruptions in global shipping routes – such as those in the Red Sea and the Panama Canal – has bolstered new orders.
Newbuilding prices for large-size container ships stood at $275 million per vessel as of February, up nearly 28% from a year earlier, meaning increased profitability for Korean shipbuilders.
The International Maritime Organization’s tightening of environmental regulations has also increased demand for eco-friendly vessels. The six container ships to be built by Hanwha will feature new eco-friendly technologies such as LNG dual-fuel engines, shaft generator motor systems and air lubrication systems to enhance fuel efficiency, the company said.
A 24,000-TEU LNG dual-fuel container ship delivered to Hapag-Lloyd by Hanwha Ocean (Courtesy of Hanwha Ocean) Another critical factor tilting the balance toward Korea is the US government’s proposed tariffs on Chinese-built vessels.
Washington is considering imposing a $1.5 million fee per Chinese-made ship docking at US ports – a move that could be implemented later this year following next week’s public hearings.
The US Department of Defense recently placed China’s largest shipbuilding conglomerate, China State Shipbuilding Corp., commonly known as CSSC, on its blacklist, reinforcing concerns over geopolitical risks associated with Chinese-built vessels.
Given these shifting market conditions, analysts said Korean shipbuilders are well-positioned to regain lost market share in the large-size container ship segment.
“Korean yards have an edge in building high-tech, eco-friendly ships, and geopolitical uncertainties are playing in their favor," said an industry expert.
Write to Jin-Won Kim at jin1@hankyung.com In-Soo Nam edited this article.
