According to Clarksons Research, South Korean and Japanese shipbuilders recorded a backlog of 20.46 million CGT and 20.06 million CGT early this month, respectively. Industry experts are pointing out that the latter will exceed the former within a couple of months if the recession in the shipbuilding industry continues.
The South Korean shipbuilding industry rose to the top of the world in January 2000 by beating that of Japan. Then, their gap continued to widen until 2008 and the Japanese shipbuilding industry was outperformed by Chinese to boot. After the financial crisis in 2008, all the three countries suffered from a decline in backlog and China outdid both South Korea and Japan. South Korea is about to be outranked by Japan now.
This can be attributed to the fact that South Korean shipbuilders are working on larger ships. Although the gap is as small as 400,000 CGT, South Korean shipbuilders have yet to deliver 483 ships whereas Japanese have yet to deliver 833 ships. In addition, the biggest portion of the backlog of Japanese shipbuilders is bulk carriers, which can be relatively easily built, while South Korean companies are mostly working on container carriers characterized by a higher level of profitability and requiring more finesse.
In the meantime, experts are pointing out that things will get even worse next year. According to the International Maritime Organization (IMO), every ship in international service is required to satisfy a fuel oil sulfur oxide content of 0.5% from 2020 onwards instead of the current requirement of 3.5%. Shipping companies are refraining from placing new orders in order to respond to the new regulations and this current situation is likely to continue until next year.
Source: Business KoreaPrevious Next