Japan’s Shipbuilding Revival Poses Limited Threat to Korea
Although the Japanese government has recently launched a ‘shipbuilding revival’ policy in earnest by creating a 1 trillion yen fund and promoting the construction of new large docks, analyses from the domestic securities industry continue to state that “the threat to K-shipbuilding is limited, and t
Japan's recent focus on shipbuilding revival, marked by a 1 trillion yen fund and the construction of new large docks, has not posed a significant threat to Korea's shipbuilding industry, according to analyses from the domestic securities industry. Despite Japan's dominance in the global shipbuilding market during the 1970s and 1980s, several limitations within Japan's shipbuilding sector prevent it from posing a serious challenge to Korea's position in the market.
The Korean shipbuilding industry has traditionally excelled in producing high value-added, eco-friendly ships such as LNG carriers, ammonia and hydrogen-powered ships, and large container ships. In contrast, Japan has historically focused on ship types with relatively low technical difficulty, including bulk carriers, small tankers, and general cargo ships.
This difference in focus results in Japan's technological infrastructure being weaker in comparison to Korea's, which has consistently maintained market-leading know-how in areas like membrane-type LNG cargo hold technology and eco-friendly combustion solutions.
One key limitation for Japan is its diminished experience in building LNG carriers. Since 2019, Japan has virtually suspended its LNG carrier production. For instance, the 8 vessels constructed by Mitsubishi Heavy Industries in the past are all that remains, with the yard even having been sold to another shipbuilder and repurposed for bulk carriers.
Additionally, Korea has a near-monopoly over the supply chain for cold insulation materials and major equipment used in LNG carriers, making it difficult for Japan to quickly catch up in the short term.
Furthermore, Japan faces challenges in terms of skilled workforce and labor shortages. The industry has experienced a significant loss of skilled workers due to large-scale restructuring during a prolonged recession, coupled with an aging population and limited supply of new personnel. Although Japan is attempting to build smart yards using AI and robots, the complexity of shipbuilding means that the absence of on-site skilled workers cannot be entirely replaced.
Another limitation for Japan is the considerable time gap until their new large dock project could become operational. Namura Shipbuilding and other companies aim to complete the project by 2035, with the first LNG carrier delivery expected to occur in the 2030s. This extended timeline means that Japan's shipbuilding revival efforts are unlikely to pose an immediate threat to Korea's status during the upcoming global shipbuilding boom lasting for the next 5 to 10 years.
However, there are concerns about Japan's potential future impact. The country is striving to secure a foothold in the US naval vessel maintenance, repair, and overhaul (MRO) market, bolstered by the strengthening US-Japan alliance. Additionally, Japan is seeking to divert order volumes from its major shipping companies, NYK, MOL, and K-Line, to its own shipyards, particularly in the field of eco-friendly ships such as ammonia, hydrogen, and CO2 carriers.
While the technological gap between Korea and Japan in this area may not be as substantial as it is in existing merchant ships, Japan still holds the potential to become a strong competitor in the medium to long term.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
