Korean Shipbuilders Eye the Future

The Korea’s shipping industry, the world largest, is preparing itself for the future. The domestic shipping industry has been sweeping the first seven places across the world in terms of the amount of orders received and the rest amount of them. However, China is also formidable as it is running right after Japan, which is tailing Korea.

Korean shipping companies are accelerating their efforts to heighten added value by developing Liquefied Natural Gas (LNG) ships and building high value-added cruise ships. The shipping industry is one of the leading export industries in Korea. Last year, it ranked fifth following semiconductors, vehicles and wireless telecommunication equipment in order in terms of export amounts by industry. In particular, the industry’s trade balance surplus was $16.1 billion, which makes up 69 percent of the total Korean trade balance surplus. That is three times bigger than that of semiconductors ($4.9 billion).

As the amount of orders placed has increased recently, domestic shipping companies are receiving orders selectively, first from high valued ships such as LNG ships and crude oil drill ships.

However, there is a long way to go. Most shipbuilding technologies are domestically sourced, but design drawings for LNG ships are being bought from GTT, a French company. Royalties paid for such ships are usually about nine billion won per ship. Around 30 such ships are being built a year in Korea; the royalties amount to some 270 billion won a year.

Three leading shipping companies such as Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and the Korea Gas Corporation have set a goal to domestically produce LNG ship design technology by 2009 and have started doing research to that end beginning in 2004. The invested research funds so far amount to 18.6 billion won in total. Research teams plan to complete technology development within this year and verify whether the technology can be applied starting next year.

If the research succeeds, Korea will become the second country to hold the technology after France. The U.S. and Norway have also jumped into this research.

(Source: www.donga.com)