Support for Securing Orders in Small and Medium Shipbuilding Industry... Busan City’s 'Overseas Small Vessel Order Package Support Project'

Support for Overseas Ship Orders in the Small and Medium Shipbuilding Industry Since 2021

Exploring Cooperation Opportunities for Small and Medium Engineering and Equipment Companies

Busan City announced that through the ‘Overseas Small Vessel Order Package Support Project’ aimed at revitalizing the small and medium shipbuilding industry, it has supported domestic construction order contracts for two small and medium-sized vessels over the past two years (one vessel worth 75 billion KRW in 2021, and one vessel worth 5.3 billion KRW in 2022). In connection with this, ship design and equipment companies have generated sales effects amounting to 17.2 billion KRW.

Busan City Hall.

The ‘Overseas Small Vessel Order Package Support Project’ is a joint initiative launched in 2021 by the Korea Research Institute of Ships and Ocean Engineering, the Busan Shipbuilding and Marine Equipment Cooperative, and the Busan Marine Engineering Industry Association. The Ministry of Trade, Industry and Energy and Busan City provide annual support of approximately 800 million KRW (including 500 million KRW in national funds).

This project utilizes a collaborative tool called the ‘Order Joint Network,’ developed in-house to strengthen the sales competitiveness of domestic small and medium shipyards that lack overseas shipowner sales capabilities. It supports the entire ship order process from discovering newbuilding projects to sales design, equipment procurement, and contract signing.

It has established information supply agreements on small and medium vessel newbuilding projects with renowned overseas shipbrokers such as ‘Clarksons (UK)’, ‘KONTIKI (UK)’, and ‘JFW Holdings (Singapore)’, and is currently conducting 22 small and medium vessel newbuilding projects with shipowners in Southeast Asia, the United States, and Europe.

The domestic shipbuilding industry is a key sector accounting for 7% of exports and employment and 4% of manufacturing, with 96% of shipbuilding companies being small and medium shipyards. However, unlike the recovery trend in orders centered on large shipyards since 2019, the small and medium vessel market faces an industrial ecosystem crisis due to external factors such as COVID-19 and a sharp decline in domestic coastal vessel newbuilding orders. Therefore, aggressive overseas market penetration and securing orders are urgently needed to overcome this.

In particular, overseas orders require systematic processes including shipowner sales, sales design, and deriving ship prices through equipment quotation acquisition. However, the domestic small and medium shipbuilding industry, which has been focused on the domestic market, has faced significant difficulties in exploring overseas markets due to a lack of sales networks and human and material resources.

In this context, the Ministry of Trade, Industry and Energy and Busan City have stepped in to provide support. Starting this year, they plan to select customized vessels based on the construction performance of local small and medium shipyards for sales activities, and also develop digital sales design technology applicable to the Order Joint Network.

Dr. Jae-Hyun Park of the Korea Research Institute of Ships and Ocean Engineering, who is in charge of the project, emphasized, “To prevent the imbalance where only large shipyards survive while small and medium shipyards disappear, and the resulting risk of industrial ecosystem collapse, continuous support for small and medium shipyards, design, and equipment companies aiming for the sustainability of the large, medium, and small shipbuilding industry ecosystem is essential.” He added, “We are verifying the effectiveness of the self-developed Order Joint Network through successful contract signings and will strive to make it an excellent alternative for shipowner sales by small and medium shipyards.”

A city official stated, “The overseas vessel orders through Busan City’s support project represent a very meaningful achievement where small and medium vessel design, engineering, and equipment companies based in Busan secure work and coexist.” He added, “We will continue to cooperate with related research institutes and companies to expand these achievements.”