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As Korea stays focused on high-margin shipbuilding, China picks up the slack

Published: 06 May. 2026, 11:18 Updated: 06 May. 2026, 15:53

Guests pose for a group photo at the delivery ceremony of the Glovis Leader car carrier in Guangzhou, China, on April 28. [XINHUA/YONHAP]

When the world's largest car carrier was unveiled on April 28, it marked a milestone for the global shipping industry — but also a sobering moment for Korean shipbuilders.

The vessel, the Glovis Leader, is owned by HMM and operated by Hyundai Glovis. Yet despite Korea’s status as a leading shipbuilding nation, the ship itself was built at Guangzhou Shipyard International, a subsidiary of the China State Shipbuilding Corporation.

The unveiling is the latest evidence that domestic shipbuilders are steadily ceding ground to Chinese rivals in lower-margin, labor-intensive segments.

One decisive factor for Korea's declining competitiveness is price. Ships are labor-intensive, requiring the construction of multiple internal “car decks” using thin plates — a process that drives up labor costs.

While most car carriers have traditionally had 13 decks, the Glovis Leader has 14, covering an area equivalent to 28 football pitches. It is also the first vessel in its class to exceed the 10,000-vehicle mark.

“Most of the vessels we’ve brought in recently were built in China,” a shipping industry source said. “Not only do they offer lower prices, but Chinese yards also offer faster delivery timelines because Korean shipbuilders tend to prioritize higher-margin ships.”

Unlike high-value vessels such as liquefied natural gas (LNG) or liquefied petroleum gas (LPG) carriers, car carriers are not considered technologically complex or especially profitable.

Chinese shipyards have leveraged that gap, improving their baseline capabilities while meeting European Union environmental standards to expand their market share.

Yet industry observers caution against dismissing the segment altogether. Car carriers can be repurposed in emergencies to transport military equipment such as tanks and armored vehicles, giving them strategic value beyond their commercial role.

“They’re not the most profitable ships, but it’s a segment that shouldn’t disappear from domestic shipbuilding,” a shipyard source said.

China’s growing dominance extends well beyond car carriers. It has tightened its grip on standard vessel segments such as bulk carriers and container ships. China accounted for 63 percent of global shipbuilding output in compensated gross tonnage (CGT) terms last year, well ahead of Korea’s 20 percent, according to industry tracker Clarkson Research.

The gap has narrowed slightly from 2024, when China held 71 percent and Korea 14 percent, but remains substantial.

“China has overtaken us even in large tankers and container ships, where Korea had an edge five or six years ago,” said Yang Jong-seo, a visiting professor of naval architecture and ocean engineering at Seoul National University. “The same is true in the mid-sized tanker market.”

Korean shipbuilders have instead doubled down on high-value vessels such as LNG and LPG carriers, where they retain a technological edge. But experts warn that relying too heavily on a narrow range of ship types could leave the domestic shipbuilders vulnerable if market conditions shift.

Of the 56.43 million CGT in global ship orders last year, 23.13 million CGT consisted of standard vessels such as container ships, while bulk carriers accounted for 9.34 million CGT. LNG and LPG carriers accounted for less than 10 percent.

There are also signs that this specialization strategy is weakening the broader ecosystem of suppliers that underpin the Korean shipbuilding industry.

After a sharp downturn in orders during the Covid-19 pandemic in 2020, domestic shipbuilding began to recover in 2022. But the rebound has not fully reached equipment makers.

A shipyard worker walks past the 14th story of the carpark on the Glovis Leader car carrier in Guangzhou, China, on April 28. [XINHUA/YONHAP]

According to the Korea Marine Equipment Association, member companies’ revenue rose from $1.23 billion in 2020 to $1.34 billion in 2024, driven largely by growth in engines, machinery and electrical systems.

However, other areas have stagnated or declined. Sales of outfitting components such as valves, pipes and anchoring equipment fell from $320 million to $309 million, while hull-related equipment — including structural components and welding systems — dropped from $151 million to $108 million.

“Our price competitiveness lags behind China, and we also fall short in economies of scale, so there’s little room to cut prices further,” an industry source said.

Yang warned that external factors — such as potential U.S. port fees on Chinese-built ships — would offer only temporary relief.

“Any gains from such measures would be artificial, driven by external conditions rather than Korea’s own competitiveness,” he said. “Ensuring sufficient scale in shipbuilding and supporting equipment suppliers are tasks that need to be handled with national security in mind.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY LEE SU-JEONG [[email protected]]