If the deal moves forward, a holding company would be created that would operate both DSME and HHI.
Yonhap noted that “South Korean shipbuilders, once a cornerstone of the country’s economic growth and job creation, had been reeling from mounting losses in the past few years, caused by an industry-wide slump and a glut of vessels amid tough competition with Chinese rivals.” It said up to 10 trillion won has been spent to salvage DSME.
Korea Broadcasting says DSME’s labor union expressed opposition to the merger because of concerns that it may result in mass layoffs and “threatened a general strike unless the plan is scrapped.”
An article on shipbuilding published last month by Clarkson Research managing director Stephen Gordon said in 2018 ordering of new ships as measured by their deadweight ton capacity fell 14 percent in 2018 to 77 million dwt, higher than the 29 million dwt ordered in 2016 but 17 percent below the average since the financial crisis.
But Gordon noted ordering rose 1.7 percent if the orders are measured using compensated gross tonnage (CGT). CGT is a method of measuring the size of ship that takes into account the complexity of the vessel being built — for example, it is much more complicated to build a liquefied natural gas carrier or a large containership than a dry bulk carrier. The value of orders placed was $64.7 billion.
Clarkson said contracts were placed with the leading building countries in 2018 as follows: Korea, 12.6 million CGT or 44.1 percent; China, 9.2 million CGT or 32.2 percent; and Japan, 3.6 million CGT or 12.6 percent. European shipyards were given contracts for 2.4 million CGT or 8.4 percent, with yards in other countries building the remainder.
With the requirement that ships start using low-sulfur fuel globally starting next year or equip their ships with scrubbers to remove sulfur oxides from their engine emissions, Clarkson estimated more than a third of ships on order had scrubbers on order. It said around 14 percent of orderbook tonnage is capable of using LNG as fuel.
In the latest edition of its Shipping Market Review, published in November, Danish Ship Finance noted the shipbuilding industry continues to be burdened by surplus capacity and “the outlook for most of the yards remains shrouded in uncertainty. Amid geopolitical tensions, the risk of seaborne demand stalling, new environmental regulations and new standards for digital ships, shipowners are putting plans to order new vessels on hold.”
are simply reducing active capacity.”
Danish Ship Finance said there were 590 shipyards globally with a combined capacity of approximately 45 million GCT. At the time of its report, it estimated only 150 yards had received new orders in 2018 and that orders were “unevenly distributed,” with 10 yards accounting for 57 percent of orders as measured in CGT. At that time it said “290 yards, representing 28 percent of global yard capacity, will run out of orders within the next 12 months.”