Newly established MSK Global in South Korea is planning to construct a large series of specialised vessels to support land reclamation projects in Japan.
A shipping source familiar with the company said the Busan-based shipping company is planning to order around 45 vessels described as “on-deck stone carriers” of between 4,000 dwt and 10,000 dwt in the next few years to transport stone blocks for the projects. The project may cost over $500m.
“The reclamation area is enormous and several vessels will be needed for the project,” the source said. “Most of the newbuildings will be ordered at small [South] Korean shipyards.”
The source said MSK Global has kicked off the order spree by booking four 4,000-dwt newbuildings at a Busan-based shipyard called HI Shipyard. It is scheduled to take delivery of two ships in the first quarter of 2020 and the other two during the second quarter.
“HI is a small shipyard and has experience in constructing small tankers, coastal ships and barges,” the source said. “There are several such small shipyards in South Korea."
The price tag for the newbuildings has not been disclosed but the vessels will be equipped with twin main engines, twin propellers and a crane with a 100-ton lifting capacity. One shipbuilding player estimated that the specialised vessels will cost around $13m each because of extra engines and cranes.
Major financing
“MSK Global has already lined up close to $200m of financing for up to 17 newbuildings,” the source said. “It will be signing the next batch of newbuildings very soon.”
TradeWinds is told that a Japanese company known as Ocean Road will operate the stone carriers upon delivery.
One shipping source said such specialised stone carriers are focused on niche projects.
“Basically, there is no secondhand market for ships like this,” the source said. “The vessels are usually ordered against long-term charter contracts and, once the charter period ends, they either find new projects or are scrapped.”
MSK Global's newbuilding programme will be a big boost to order-starved South Korean shipyards.
Many are struggling to stay afloat because of thin orderbooks. A number of shipyards in the country — currently the world's second-largest shipbuilding nation — closed down after the collapse of the financing market a decade ago.
The South Korean government is trying to revive the sector and was reported to have established five “industry crisis” zones in a bid to help the struggling shipbuilders.
The areas include Dong-gu in Ulsan, Geoji in Gyeongsang and Jinhae-gu of Changwon, as well as Tongyeong and Mokpo.
The government will reportedly provide financial and tax incentives for suppliers of shipbuilding outfits in the designated regions.
It will also provide job training to people made unemployed through recent restructuring to boost their rehiring or full-time employment prospects.
In another potential boost to South Korea's shipbuilding sector, the government and private companies are reportedly planning to order 140 ships powered by LNG to support small and medium-size domestic yards. The scheme is part of a series of measures to help shipbuilders struggling for new contracts.
