Ship shape: Ship­yards go high end

Chi­nese ship­yards be­gin mak­ing high-end ves­sels for do­mes­tic and over­seas cus­tomers, tak­ing on global com­peti­tors

China Daily (USA) - - FRONT PAGE - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

Af­ter de­liv­er­ing frigates to naval forces of Al­ge­ria and Pak­istan, and mega-con­tainer ships, liq­ue­fied nat­u­ral gas or LNG car­ri­ers and ve­hi­cle car­ri­ers to shipown­ers in the United States, Nor­way, Den­mark, Ger­many and Sin­ga­pore, Chi­nese ship­yards have re­cently made in­roads into the high-end ship seg­ment, to com­pete with their South Korean com­peti­tors.

What’s fa­cil­i­tat­ing that trend is the “marine econ­omy”, whose mean­ing has widened in re­cent times to in­clude in­dus­tries like ship­ping, fish­ing, aqua­cul­ture, oil and gas.

Marine econ­omy now in­cludes sec­tors such as marine chem­istry, bio­med­i­cine, ocean power, sea­wa­ter use, marine tourism, ocean en­gi­neer­ing and con­struc­tion. A large va­ri­ety of ves­sels serve these in­dus­tries and sec­tors. Con­ven­tional ves­sels like bulk ships and ore car­ri­ers are no longer the kings of the marine econ­omy trans­port sys­tem.

The new-age marine econ­omy has cre­ated new op­por­tu­ni­ties for ship­yards. More so for Chi­nese ship­yards be­cause of the Belt and Road Ini­tia­tive.

Many economies par­tic­i­pat­ing in the ini­tia­tive are seek­ing to de­velop trade, re­gional con­nec­tiv­ity, off­shore en­ergy, tourism and other ser­vice busi­nesses via the 21st Cen­tury Mar­itime Silk Road. Ad­di­tional de­mand for ships is com­ing from China’s in­creas­ing re­source de­ploy­ment into high-end man­u­fac­tur­ing as part of the Made in China 2025 strat­egy.

Lin Zhongqin, pres­i­dent of Shang­hai Jiao­tong Univer­sity, said ca­pa­ble Chi­nese ship­yards have al­ready up­graded their prod­ucts, hav­ing sold cheap bulk car­ri­ers and tug­boats for more than a decade. They now make com­plex, high val­ueadded ves­sels to reach buy­ers in new seg­ments through in­ter­na­tional col­lab­o­ra­tion, re­search and devel­op­ment ac­tiv­i­ties.

Shang­hai-based HudongZhonghua Ship­build­ing (Group) Co, a sub­sidiary of China State Ship­build­ing Corp, bagged an or­der for four LNG car­ri­ers with tank ca­pac­ity of 174,000 cu­bic me­ters each from Ja­pan’s Mit­sui O.S.K. Lines or MOL last month. The to­tal value of this deal is 5.2 bil­lion yuan ($735 mil­lion).

These LNG car­ri­ers will be equipped with the lat­est du­al­fuel sys­tem tech­nol­ogy de­vel­oped by the Chi­nese ship­yard. The tech­nol­ogy helps lower a ship’s fuel con­sump­tion by up to 16 per­cent.

The ves­sel will be used in Rus­sia’s Ya­mal LNG project from 2019 or 2020 on­ward, through a wholly-owned sub­sidiary of MOL. The four con­tracted car­ri­ers will trans­port Euro­pean LNG to and from the project.

Hudong-Zhonghua also de­liv­ered con­tainer-car­ri­ers, ve­hi­cle-car­ri­ers and chem­i­cal tankers to clients in Swe­den and the Nether­lands ear­lier this year.

Chen Jian­liang, chair­man of Hudong-Zhonghua, said China, as well as both de­vel­oped and de­vel­op­ing coun­tries, are all ea­ger to pur­chase nat­u­ral gas from abroad to adopt greener en­ergy. LNG car­ri­ers can meet the de­mand to se­cure their en­ergy sup­ply from over­seas mar­kets.

The Amer­i­can Bureau of Ship­ping, a Hous­ton-based clas­si­fi­ca­tion so­ci­ety, pre­dicted that around 100 LNG car­ri­ers will be bought by dif­fer­ent shipown­ers across the globe between 2017 and 2020.

“China is shift­ing from pro­duc­ing in­ef­fi­cient and dated ves­sels that are clog­ging up Chi­nese ship­yards to in­vest­ing heav­ily in the rapidly grow­ing mar­ket of LNG and liq­ue­fied petroleum gas or LPG car­ri­ers, as well as marine fish­ing ships, law en­force­ment ves­sels, large ice­break­ers and chem­i­cal tankers,” said Chen.

To date, Hudong-Zhonghua has built 13 LNG car­ri­ers on or­ders placed by both do­mes­tic and for­eign com­pa­nies, in­clud­ing CNOOC En­ergy Tech­nol­ogy and Ser­vices, China LNG Ship­ping Ltd, Teekay LNG Part­ners and Bri­tish Gas Ser­vices Ltd.

Even though many Chi­nese ship­yards went bank­rupt and re­merged last year, the oper­a­tional rev­enue of HudongZhonghua was 18.35 bil­lion yuan, up a bit from 2015.

XU CONGJUN / FOR CHINA DAILY

Two work­ers di­rect an LNG cargo to shore at Nan­tong Wharf in Jiangsu prov­ince.

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