TOKYO -- Having just constructed Japan's first new dry dock in 17 years, Imabari Shipbuilding should be brimming with excitement. But its chief instead is cautious as to whether the leading Japanese shipbuilder will be able to make the most of the new facility.
With the new dock, the company will be able to handle orders for multiple units of ultralarge vessels, President Yukito Higaki said Tuesday in a news conference to mark the occasion. The company is finally in a place where it can compete internationally, he said.
The dry dock measures 610 meters long, 80 meters wide and 11.7 meters deep. Three gantry cranes can together lift an object as heavy as 1,330 tons. Both among the largest in Japan, the dock and cranes at the Marugame shipyard in Kagawa Prefecture cost roughly 40 billion yen ($359 million).
Using the new dock and existing facilities at its mainstay Saijo shipyard in Ehime Prefecture, Imabari can now construct an annual 10 ultralarge ships stretching roughly 400 meters long and capable of hauling 20,000 containers.
A growing number of marine transporters are ordering containerships in lots of 10 to 20 to save on costs. With this in mind, Higaki stressed that the addition of the new dry dock has simply put Imabari at the starting line of a race against rivals.
Uncertain waters
The company decided to build the dock after landing orders from Mitsui O.S.K. Lines of Japan and Evergreen Marine Corp. (Taiwan) for ultralarge containerships capable of holding 20,000 containers. The contracts require the shipbuilder to deliver 13 such vessels by 2019.
But the Japanese company has no other orders to fill after that. Amid the intense competition among shipbuilders for ultralarge-containership orders, Higaki said he was not so sure whether the company would be able to win other contracts for such vessels.
The biggest source of the president's pessimism is what he sees as an uneven playing field in the global shipbuilding market.
"It's undeniable that Chinese and South Korean shipbuilders have the upper hand over us in sales talks because of assistance from their governments," said Higaki, who lamented that "it is not pure price competition."
Headwinds blowing
French shipper CMA CGM awarded a contract in August for nine of the largest-class containerships to Shanghai Waigaoqiao Shipbuilding and sister company Hudong-Zhonghua Shipbuilding (Group), stunning industry insiders. South Korean shipbuilders with established track records, such as Hyundai Heavy Industries and Samsung Heavy Industries, had been seen as the main contenders for the contract worth more than 150 billion yen.
But Chinese state shipbuilders have a strong edge over foreign rivals because they enjoy strong government backing. With the goal of consolidating state shipbuilders, Beijing offers such generous assistance as interest-free loans from financial institutions. South Korea also extends support to its shipbuilding industry.
Higaki let out his frustration with the uphill battle the company is facing against the Chinese and the South Koreans. But unless the company figures out how to win the race, rigged as it may be, the new dry dock will turn into a massive boondoggle.
