The South Korean government is exploring new ways to support its shipbuilding industry and build on the slim lead they have developed in the past few months over the competition from Chinese shipbuilders. The heads of South Korea’s three major shipbuilders, Korea Shipbuilding & Offshore Engineering, Daewoo Shipbuilding & Marine Engineering, and Samsung Heavy Industries, met with Lee Chang-yang, the Minister of Trade, Industry and Energy on Friday to discuss ways they could work with the government to advance the industry

South Korean media reports indicate that among the topics they were discussing is the chronic labor shortage. After downsizing their operations in the mid-2010s, the shipyards are reportedly struggling to find skilled labor to expand their staff to meet the influx of orders. The government had recently announced that it would increase the limits on certain categories of foreign workers in an effort to meet some of the shortfalls in shipbuilding and other industries. Reports are saying that the shipyard executives called for further easing regulations on foreign workers as well as additional training programs, with Minister Lee promising that details would be announced soon on further government efforts to address the labor challenges.

Lee according to the Korean Joong Ang Daily urged the CEOs to make preemptive investments so Korean shipbuilders can maintain their global competitiveness. He promised that the government will focus on policies in the areas of labor expansion, development of technology, and creating a better business environment. In return, he said the shipyard executives had committed to investing $176 million this year into the development of green maritime technologies including ammonia-powered vessels as well as digitization and automation as Korea seeks to maintain its lead in high-value ships.

The meeting on the future of the shipbuilding industry came as data was released showing that the South Korean yards had during July for the third month in a row received the highest percentage of shipbuilding orders. Citing data from Clarkson Research the ministry said South Korea had won 55 percent of the total orders by tonnage (1.19 million tons) in July which included 19 of the total 70 ships ordered worldwide.

In the first seven months of 2022, the South Korean shipyards added over 11 million tons to their backlog which was made up of orders for a total of 204 ships. It was 47 percent of the orders placed in 2022 and surpassed the Chinese shipyards which received orders for just over 10 million tons or a total of 383 ships.

The South Korean shipbuilders collectively now have a backlog amounting to more than 35.8 million tons or a total of 717 ships. The ministry highlighted that the backlog has grown for 11 consecutive months up by more than a quarter versus July 2021.

Clarkson reports that orders for large LNG carriers (exceeding 140,000 cbm) were the highest in 22 years with South Korea leading the orders. The main shipbuilders received all of the orders, a total of 12, placed in July for LNG carriers, driven by Qatar’s efforts to move forward with its planned expansion. Other segments, including containerships, tankers, and bulkers, all reported a decline in orders in July.

The government’s focus on high-value ships was well justified with approximately half of all the orders placed in July falling in that segment and it continues to grow. They highlighted that the average price of an LNG carrier also reached a new record of $236 million per vessel. Further, the Koreas also called attention to the fact that eco-friendly ships accounted for 60 percent of the total orders placed.

The three major shipbuilders told the ministry that based on the strength of the orders they are ahead of target for the year. Collectively they reported winning orders valued at more than $30 billion in the first seven months of 2022. That places the industry at 87 percent of its yearly target which calls for orders of $35 billion in 2022. Beyond South Korea’s big three, the ministry also reported strong growth among the mid-sized yards. They said those yards have received nearly $2.5 billion in orders mostly for smaller containerships and tankers.

Minister Lee reportedly emphasized during the meeting the importance of the government and industry working together to support the growth of the Korean shipbuilding industry.