대한조선주식회사

Daehan Shipbuilding Co overcame the economic downturn caused by constructing medium-sized tanker

Despite the recession, Daehan Shipbuilding Co continues to sell only one well, a medium-sized Aframax tanker.

According to Tradewinds, a shipbuilding and shipping media outlet, Daehan Shipbuilding Co recently received an order for two Aframax tankers from the Ocean Gold Tanker, a Greek shipping company. The deliveries will be in August and November next year, respectively.

Daehan Shipbuilding Co overcame the economic downturn caused by the construction of medium-sized tankers.

The Aframax is a medium-sized tanker weighing 80,000 to 110,000 tons. It means that considering freight and ship prices, it is an ideal and efficient size to make the most profit.

In late September, Daehan Shipbuilding Co received an order for two Aframax tankers from CMS, a Greek shipping company, and this is the second time in a month.

Considering that other medium-sized shipbuilders are still suffering from a shortage of orders, the results of Daehan Shipbuilding Co are even more remarkable. Although the order market is recovering, it is still a long way from medium-sized shipbuilders.

According to the Korea Export-Import Bank's Overseas Economic Research Institute's "Medium-sized Shipbuilders Third Quarter Trends in 2018," the volume of orders received by Korean mid-sized shipbuilders in the third quarter decreased 26.2 percent year-on-year. Among medium-sized shipbuilders such as DaeSun Shipbuilding Co and STX Offshore ＆ shipbuilding Co, only Daehan Shipbuilding Co received orders in the third quarter.

Last year, Daehan Shipbuilding Co was the only medium-sized shipbuilder to avoid a deficit with 430 billion won in sales and 400 million won in operating profit. This year is the second consecutive year it has a surplus. And Daehan Shipbuilding Co topped the sales list of medium-sized shipbuilders this year.

In terms of its ability to overcome the recession, the company is focusing on Aframax tankers to increase its competitiveness to win orders.

More than 80 percent of the employees of the Daehan Shipbuilding Co’s Haenam Shipyard are residents. It is no exaggeration to say that he is in charge of employment in Mokpo. However, as the shipbuilding industry has been in a slump since 2009, Daehan Shipbuilding Co has faced difficulties with a workout program and legal management.

After effort on voluntary retirement and unpaid leave of absence, it graduated from legal management at the end of 2015 and improved considerably its radical reform. Instead of abandoning the bulk ship business, which is fiercely priced competing with China companies, it has decided to order only AFRAMAX tanker, its best product type. An official at Daehan Shipbuilding Co said, "We have arranged the type of tanker into an Aframax-class tanker with differentiated technology.

Since only one type of ship was built, its proficiency and productivity improved.

Currently, it takes two years for Chinese shipbuilders to build Aframax-grade ships, but it takes only one year and two months for Daehan shipbuilding Co. From 2015 to last year, Daehan shipbuilding Co topped the list by winning 26 orders, which is 15.1% of 172 Aframax-class tankers ordered worldwide.

Preparations for diversification of ships are accelerating as it has secured a stable position in the Aframax tanker market.

In particular, it is planning to expand orders for Suez Max tankers. The Suez Max tanker is the largest size of ship that can pass through the Suez Canal. It will contain 130,000 to 150,000 tons and build the bottom of the ships as sharp as the bottom of the Suez Canal.

An official at Daehan Shipbuilding Co said, "China's shipbuilders are increasing their technological capabilities, so we are trying to increase the number of orders for Suez Max-class ships," adding, "The technology development is already over."

According to foreign media such as Splash, Daehan Shipbuilding Co signed a contract with a Norwegian Paldor merchant shipping company for four Suez Max-grade tankers in late September. Two of them have been confirmed to have been ordered and the other two have signed optional contracts.