Hanwha Ocean in unique collaboration with SHI

South Korean shipbuilder Hanwha Ocean has reportedly entered into a unique agreement with compatriot rival Samsung Heavy Industries (SHI), marking the first-ever collaboration between two shipbuilding heavyweights.

Image credit: Hanwha Ocean

While specifics of the deal remain undisclosed, reports suggest that Hanwha Ocean will supply blocks to SHI, contributing to the construction of containerships scheduled for delivery starting in 2026.

The contract, valued at over $38 million, is seen as a response to the pressing capacity issues and labor shortages plaguing major shipyards, a consequence of extensive order books accumulated in recent years.

The orders have been primarily driven by the containership sector and demand for LNG carriers.

The ships in question are believed to be part of Evergreen Marine’s massive containership order from last year.

Under the lucrative contract, SHI has been entrusted with the construction of sixteen 16,000 TEU methanol dual fuel container vessels. 

Nihon Shipyard will build the remaining eight units under the same terms. In total, Evergreen is expected to spend up to $5.04 billion on the investment.

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Offshore Energy has reached out to Hanwha Ocean for a statement on the matter and is yet to receive a response.

SHI, grappling with a backlog of orders valued at nearly $32 billion, is operating at full capacity for the next three years. The prolonged lead times and workforce limitations pose competitive challenges, highlighting the need for innovative solutions.

The move also reflects the changing fortunes of South Korean shipbuilders following record contract years. While SHI faced challenges in achieving its order targets last year, securing only 87 percent of its goal, Hanwha Ocean, achieved approximately 60 percent of its annual target.

The latest challenges in meeting the targets have triggered Hanwha Ocean to withhold its shipbuilding targets for 2024, according to local media reports, reflecting a cautious stance following the yard’s acquisition by Hanwha Group.

The collaborative efforts between Hanwha Ocean and Samsung Heavy Industries come against the backdrop of the persistent rivalry between South Korean and Chinese shipbuilders for global orders. This rivalry has intensified in recent years, with Chinese shipyards once again taking the lead in global shipbuilding demand in 2023.

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The competition for new vessel orders is expected to become even tougher in 2024 with an anticipated drop of 16 percent in demand. The shipbuilding demand over the past couple of years has been driven in part by an increased demand for green technologies and solutions, including alternative fuels.

As the world focuses on sustainability and environmental consciousness, the demand for ships equipped with eco-friendly features is anticipated to further fuel the rivalry between South Korean and Chinese shipbuilders vying for supremacy in meeting the evolving needs of the global shipping industry.