Japanese plans to revive its shipbuilding industry have sparked concerns in South Korea, but analyses from domestic securities industry continue to assess the threat as limited. The Japanese government has allocated a 1 trillion yen fund and is promoting the construction of new large docks, aiming for a significant recovery in the sector. However, Korean shipbuilders maintain their market position through their focus on high-value and eco-friendly vessels.

Japan’s Shipbuilding Revival

Japan’s shipbuilding industry, which dominated the global market in the 1970s and 1980s, is making efforts to regain its former glory. The Japanese government has launched a ‘shipbuilding revival’ policy, including the creation of a 1 trillion yen fund and the promotion of new large docks. Namura Shipbuilding is considering building a new dock near its Imari shipyard in Saga Prefecture by 2035, capable of constructing LNG carriers, ammonia carriers, and other next-generation energy vessels. The project could cost as much as 100 billion yen, with government support, making it Japan’s first new large shipbuilding dock since 2017.

Technical and Market Advantages of Korean Shipbuilders

Korean shipbuilders, despite the Japanese revival, continue to dominate high-value segments of the market. They have a strong presence in LNG carriers, ammonia and hydrogen-powered ships, and large container ships. Core technological capabilities such as membrane-type LNG cargo hold technology and eco-friendly combustion solutions have been Korean strengths. However, Japan’s experience in building LNG carriers has been virtually suspended since 2019, with only 8 vessels built by Mitsubishi Heavy Industries being operational. Korea has thoroughly monopolized the supply chain for cold insulation materials and major equipment, making it difficult for Japan to catch up in the short term.

Production Infrastructure and Workforce

The Japanese shipbuilding industry faces significant challenges in its production infrastructure. While Korea actively utilizes the world’s highest level of highly skilled workforce and large smart yards, Japan struggles with the aging of skilled workers and severe labor shortages due to a long period of stagnation. This gap is evident in both advanced facilities and human resources, giving Korean shipbuilders a significant edge in the global market.

Market Share and Orders

According to Hellenic Shipping News, as of July 2026, China accounted for 75% of global new ship orders by compensated gross tonnage, followed by Korea at 17% and Japan at 2%. In the LNG carrier market, Korean yards won 65.5% of the 55 new orders in the first half of 2026, while Chinese yards secured 34.5%. Notably, major global carriers like MSC and CMA CGM are increasingly placing orders with Chinese shipyards, even despite political tensions, indicating a shift in market dynamics.

What this means for operators

For ship operators, the continued dominance of Korean shipbuilders in high-value segments such as LNG carriers and container ships means they will likely continue to rely on Korean yards for these specialized vessels. However, the growing capabilities of Chinese yards in these segments and their ability to meet delivery schedules could present new opportunities and challenges in the coming years. Operators will need to stay informed about market trends and adapt their procurement strategies accordingly.