Construction to begin by 2028! South Korea and the United States to collaborate on building dual-fuel container ships
South Korea's efforts to help rebuild the US shipbuilding industry are deepening, with a medium-sized LNG dual-fuel container ship jointly developed by South Korea and the United States expected to begin construction by 2028.
On 19 June local time, HD Hyundai Group and U.S.-based Edison Chouest Offshore Company (ECO) signed a ‘Strategic Partnership Agreement for the Construction of U.S. Merchant Ships’ in New Orleans, Louisiana, U.S., reaching an agreement to jointly build LNG dual-fuel container ships.
The two parties plan to jointly construct medium-sized LNG dual-fuel container ships in the United States by 2028, while also collaborating on the research and development of other ship types and port cranes.
ECO is a comprehensive enterprise integrating the roles of offshore vessel operator, builder, and shipowner, with world-class competitiveness in the offshore support vessel (OSV) sector. It operates five merchant shipyards in the United States and currently owns and operates approximately 300 OSVs.
Under the agreement, HD Hyundai Group will provide comprehensive technical support, including ship design assistance, equipment procurement agency services, and construction technical assistance, and will directly oversee the production of certain ship sections. Additionally, the company will invest in key technological assets.
This collaboration is taking place against the backdrop of the U.S. government's efforts to rebuild its domestic shipbuilding industry and strengthen its defence capabilities. According to Clarkson data, from 2022 to 2024, U.S. shipyards will only undertake three global container ships, all of which are 3,600 TEU container ships ordered by U.S. shipowners.
Therefore, ECO has requested cooperation with HD Hyundai Group, a leading global shipbuilding company, and HD Hyundai Group, aiming to expand its U.S. market share and strengthen strategic cooperation, is also willing to establish a strategic partnership with ECO.
An HD Hyundai Group official stated, ‘The United States is a steadfast ally and important business partner for us. The company plans to actively support the United States' efforts to rebuild its shipbuilding industry and strengthen security through cooperation with ECO.’
South Korean industry insiders noted that the agreement between HD Hyundai Group and ECO on merchant ship construction marks another significant advancement following the agreement signed in April between South Korean and U.S. companies in the military shipbuilding sector. At that time, HD Hyundai Group signed a memorandum of understanding with Huntington Ingalls Industries (HII), the largest naval shipbuilder in the United States, announcing that both parties would strengthen cooperation to enhance the United States' shipbuilding capabilities and jointly advance the construction of vessels of various classes.
The reason why South Korea-U.S. shipbuilding cooperation has garnered significant attention stems from President Trump's direct mention of ‘the U.S. shipbuilding industry needing South Korea's assistance and cooperation’ during a phone call with former South Korean President Yoon Suk-yeol following his election victory in November last year. Subsequently, during a radio interview on 6 January this year, Trump discussed the ‘reconstruction’ of the U.S. shipbuilding industry, stating that ‘it may also be possible to utilise allied nations' shipbuilding capabilities,’ thereby reaffirming his intention to collaborate with the South Korean shipbuilding industry.
As early as July last year, South Korea's two major military shipbuilding companies, HD Hyundai Heavy Industries and Hanwha Ocean, had successively signed a Main Ship Repair Agreement (MSRA) with the U.S. Navy's Naval Supply Command, obtaining certification to repair U.S. Navy vessels and thereby entering the U.S. ship MRO (maintenance, repair, and overhaul) market.
On 1 January this year, Kwon Oh-hyuk, chairman of HD Hyundai Group, delivered a New Year's address, stating, ‘At present, our group's core shipbuilding business urgently needs to explore entirely new paths different from the past. We must firmly seize the opportunity to cooperate with the United States and effectively respond to the strong pursuit of China's shipbuilding industry.’
Meanwhile, South Korea's newly elected President Lee Jae-myung also stated during his campaign: ‘U.S. President Trump has shown exceptional interest in the shipbuilding industry, but the U.S. shipbuilding industry no longer holds a significant global advantage. Despite facing pressure from China's catch-up efforts, South Korea's shipbuilding industry still possesses its own competitive advantages. If South Korea's shipbuilding industry can fully leverage these advantages and collaborate with the United States, it may bring more orders and new development opportunities to South Korea.’
Meanwhile, to protect South Korean companies from the impact of the U.S. ‘tariff stick’ policy, the South Korean government has proposed a comprehensive ‘South Korea-U.S. Shipbuilding Industry Cooperation’ plan, stating that it will ‘mobilise the full strength of South Korea's shipbuilding industry to prioritise fulfilling U.S. orders for military ships, oil tankers, and icebreakers’ in exchange for tariff exemptions on South Korean goods. The South Korean side stated that if the United States has large-scale long-term orders for military ships, oil tankers, and icebreakers, South Korean shipbuilding companies can proceed with manufacturing and delivery in advance. This move is seen as South Korea's ‘self-rescue action’ amid intensifying Sino-American competition and Trump's tariff threats.
The Korea Trade-Investment Promotion Agency (KOTRA) also noted in a report released in March this year that Trump's policies since taking office have presented new opportunities for South Korea's shipbuilding industry, which is poised to benefit from the ‘revival’ of the U.S. shipbuilding sector. Centred on the MRO business for U.S. Navy vessels and the new military shipbuilding market, not only large South Korean shipbuilders but also medium-sized shipbuilders and ship equipment companies will have opportunities for investment and expansion. Furthermore, the ultimate goal of South Korea's shipbuilding industry is not only to focus on the MRO business for U.S. naval vessels but also to expand into the new military shipbuilding sector.
The report emphasises that if South Korea's shipbuilding industry wishes to sustain long-term cooperation with the United States in the shipbuilding sector, it must not only focus on increasing orders but also implement a ‘localisation in the United States’ strategy. The U.S. government is actively encouraging the construction and operation of domestic shipyards to enhance domestic production capacity. South Korean shipbuilders must seize this opportunity and engage in strategic dialogue with the U.S. side.