Hanwha Ocean denies exit from container shipping sector

South Korea’s shipbuilding major Hanwha Ocean, formerly known as Daewoo Shipbuilding, has denied recent media rumors and reports suggesting its exit from the container shipping sector.

The Korean media had reported that Hanwha Ocean might discontinue the construction of container ships due to financial challenges and low profit margins. Reports further indicated that the company did not undertake any container ship orders in 2023 and that it would shift away its focus on the naval sector and more technologically advanced vessels.

What is more, the reports emerge as China’s shipbuilding industry continues to advance, narrowing the technological gap with its Korean counterparts. According to Clarksons, China now contributes to over 50% of the shipbuilding total output for the first time in history.

Data from Clarksons further indicates that Hanwha Ocean’s last container ship order was signed in January 2022. The company is now focusing on liquefied gas ships and military ships, as well as ammonia carriers.

“We would like to clarify that our company’s fundamental stance is to maximize profitability through selective shipbuilding orders based on profitability-centric strategies. While we are in the process of establishing business strategies for various ship types in accordance with this principle, it is not true that we are discontinuing operations for specific ship types such as containers,” Director of Finance, Shin Yong-in, said in a stock exchange filing.

Hanwha Ocean’s order intake is being scrutinized on the heels of its fresh takeover by South Korean Hanwha Group last year marking a significant transformation of the shipbuilder, starting with its fresh start under a new name.

The $1.5 acquisition deal between the duo, signed in December 2022, and finalized in May 2023, came on the back of challenges former DSME faced in recent years including a failed takeover from Hyundai Heavy Industries Holdings (HHIC).

The reborn shipbuilder, however, failed to meet its shipbuilding target for 2023, and achieved approximately 60 percent of its $7 billion annual target. This has triggered Hanwha Ocean to withhold its shipbuilding targets for 2024.

Meanwhile, an unusual partnership has emerged between Hanwha Ocean and its rival Samsung Heavy Industries (SHI) on the construction of building blocks, contributing to the construction of containerships scheduled for delivery starting in 2026.