Why Korean firms don’t build ferries

After the tragic sinking of the ferry Sewol, many are wondering why Korea, which has some of the world’s leading shipbuilders, is importing decades-old ferries from Japan and other countries.

According to shipbuilders, they aren’t making ferries, not because they do not have the capability but because doing so is not profitable.

For example, until about 10 years ago, Hyundai Heavy Industries manufactured Ro-Pax ships, which carry passengers and vehicles, and sold them to Spain and Norway. Samsung Heavy Industries also built and sold about 10 such ships but stopped doing so years ago.

In 2010, Daewoo Shipbuilding & Maritime Engineering received an order from a Tunisian marine company for a ferry that can accommodate 3,200 passengers and 1,060 vehicles. However, the Korean company was not interested in manufacturing ferries.

“The three largest shipbuilding companies in the country manufacture over 30 percent of the ships around the world. … We mostly make oil tankers, container ships and bulk vessels … the commercial ships,” said a spokesperson for Hyundai Heavy Industries who declined to be named.

Each of these ships usually cost over $100 million to make, and the figure rises to as high $1 billion for one with special features.

He said Korean shipbuilders build hundreds of such commercial vessels each year. “The docks are designed to most efficiently serve commercial vessels. To sum up, passenger ships are not the kind of ships we build.”

Compared with the commercial ship market, the passenger ship market is relatively small. Luxury cruise ships, which are more profitable to make than ordinary passenger ferries, cost around $1 billion each to make, but only 10 such ships are sold globally each year.

A spokesperson for Samsung Heavy Industries explained that local marine companies that operate ferries do not have the money to order new passenger ships, which may cost hundreds of billions of won. Hence, they usually import old ferries from Europe or Japan.

He added that as there was no domestic demand for new and upscale passenger ships, all of the 10 passenger ships Samsung built were sold abroad.

He also said that European countries are traditionally strong in building cruise ships.

“Cruise ships are like hotels. Those who order cruise ships often have very detailed requests, like using interior materials from a diverse range of European countries,” he said.

When building cruise ships, the design and interiors matter more than the shipbuilding itself. As Korean shipbuilders do not have the resources to meet clients’ design specifications, they would have to import everything they need from Europe, making building cruise ships unprofitable. By Yoon Ja-young The korea times

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