South Korea’s Hanjin Shipyard Wins First Commercial Order in Six Years
Six years after being forced to leave the commercial newbuilding business due to financial troubles, South Korea’s Hanjin Heavy Industries & Construction announced it has won its first commercial shipbuilding contract since 2015. The order comes as the shipbuilder completed a reorganization last month after being acquired in the spring of 2021.
The new order is for four 5,500 TEU containerships that are being built for an unnamed European shipping company. Hanjin reported that it will build a class eco-friendly container carrier designed to reduce greenhouse gas emissions while reducing energy consumption. The contract, which was valued at approximately $270 million, calls for the delivery of the vessels before November 2023.
“We have confirmed our competitiveness in the market by winning the first order for commercial vessels since the merger and acquisition,” said an official from Hanjin Heavy Industries & Construction. “We are now able to lay the foundation for an early normalization of our business.”
Since 2016, the shipyard had mostly been building government ships. The company had entered into a voluntary agreement with its creditors to downsize the operation while it sought to recapitalize the business. The Korean Development Bank became the shipyard’s primary creditor providing a lifeline for the operation similar to what it has done for other financially troubled South Korean shipbuilders in recent years. KDB began seeking the opportunity in 2019 and 2020 to return the mid-sized shipyards, including Hanjin, to private investors.
KDB entered into negotiations with Korean investors and in April 2021 reached an agreement to sell Hanjin to a group lead by the Korean construction company Dongbu Corp. They acquired two-thirds of the shares of Hanjin declaring they intended to revitalize the business. KDB was also successful in selling shares of STX, another mid-sized shipyard in South Korea, to another investment group. In July, STX was relaunched as Yard K Shipbuilding.
Hanjin said its strategy will be to focus on mid-sized vessels both in the containership segment as well as small and mid-sized LNG and LPG carriers, petrochemical carriers, and Aframax crude oil tankers. In addition, Hanjin also recently won an order for three hybrid vessels to support the government’s South Sea Fisheries Management Group of the Ministry of Oceans and Fisheries.
The resumption of commercial shipbuilding comes as the major shipbuilders are struggling to keep up with orders. This year has seen a record order pace for new containerships, taking the segment to a record order book and extending deliveries to 2025 based on available yard space. In addition to providing additional shipbuilding capacity, Hanjin is positioning itself to take advantage of both the Korean government’s plan to grow the shipbuilding industry focusing on environmental capabilities and new segments such as ammonia shipping as well as the government’s overall Green Plan to increase Korea’s renewable power supplies.