The trade conflict between the U.S. and China has spilled over into the shipbuilding industry and Korean shipbuilders that compete with China for the No. 1 spot in the global shipbuilding market are expected to benefit from this situation.
According to industry sources, the U.S. Trade Representative (USTR) recently received a complaint from five U.S. labor unions to look into unfair practices by China’s shipbuilding, shipping, and logistics industries.
The complaint alleges that the Chinese government is discriminating against U.S. ships and shipping companies by artificially lowering prices to expand its market share and build a network of ports and logistics facilities around the world in an effort to dominate the global shipbuilding, maritime, and logistics industries. The five U.S. labor unions are calling for the U.S. government’s support including imposing fees on Chinese-built ships and creating a shipbuilding support fund. The U.S. government has 45 days to decide whether or not to launch an investigation.
Chinese shipbuilders have been expanding their share of shipbuilding orders on the back of easy financing and low costs. Of the 64.47 million GT delivered by global shipbuilders in 2023, Chinese shipbuilders delivered 32.8 million GT, accounting for 50.9 percent. This was followed by Korean shipbuilders with 18.32 million GT (28.4 percent) and Japanese shipbuilders with 9.94 million GT (15.4 percent). U.S. shipbuilders, on the other hand, accounted for only 0.1 percent of the total deliveries at 610,000 GT.
If the U.S. government sanctions Chinese shipbuilders with tariffs, Korean shipbuilders are expected to receive reflective benefits. As it is not easy for the United States to increase its shipbuilding capacity in the short term, it has no choice but to order ships to Korea. In particular, Korean shipbuilders are expected to benefit in the field of gas carriers such as those of liquefied natural gas (LNG) which the United States exports much. The United States is the world’s No. 1 LNG exporter, which exported 91.2 million tons of LNG in 2023. Demand for U.S. gas is on a gradual rise as the war in Ukraine has interrupted global natural gas supply.
While this is good news for Korean shipbuilders, it remains to be seen how it will directly impact them, industry insiders say. “U.S. shipping companies account for a small share of the U.S. shipping industry, and U.S. orders account for a small share in the global shipbuilding market, so America’s influence is limited in the global shipbuilding market,” said an industry insider. “Even in the case of LNG carriers, Korean shipbuilders are already dominating the LNG carrier market except for volume that Chinese shipbuilders are taking with financial support from the Chinese government.”