Due to a backlog of orders, HD Hyundai Group plans to establish a new shipbuilding base in Morocco to consolidate its global shipbuilding market position and actively seek new ship orders.
HD Hyundai Heavy Industries is seeking to establish a new production base in the North African nation of Morocco, according to Korean business media BusinessKorea. With its docks already full with a three-year backlog of work, the shipbuilder plans to strengthen its position in the global shipbuilding market and actively seek new vessel orders by securing an additional strategic base in a key location connecting Africa, Europe, and the Americas.
According to industry sources on July 15, HD Hyundai Heavy Industries is considering participating in a bid for the operating rights of the Casablanca shipyard, currently being conducted by Morocco’s National Ports Agency. If successful, the company will gain the right to use the production facilities for 30 years. The local shipyard is being built in Casablanca, Morocco’s largest commercial city on the Atlantic coast, and will be Africa’s largest at 210,000 ㎡. It is scheduled to be equipped with facilities including one onshore dock, a lifting platform, and wharves. Morocco, having little experience in shipbuilding, has decided to entrust the shipyard’s operation to a foreign shipbuilding company.
Morocco has set a goal to secure around 100 merchant vessels by 2040 to boost its trade. HD Hyundai Heavy Industries plans to absorb this demand through its local base while also actively leveraging its geographical advantages to secure additional orders from major European shipping companies. HD Hyundai, which has already established global bases in Vietnam and the Philippines, is also building a comprehensive cooperative foundation with countries such as the United States, India, and Peru.
HD Hyundai Heavy Industries’ pursuit of entry into Morocco is part of the HD Hyundai Group’s core strategy of expanding its global production bases. The company has devised a strategy to secure large volumes of local orders by establishing shipyards in key countries aiming to revive their maritime industries. As acquiring overseas shipyards requires massive capital and carries significant risks, the company plans to first penetrate the market by obtaining shipyard operating rights to build vessels.
Morocco has announced a plan to secure approximately 100 merchant vessels by 2040 to promote foreign trade. With the Moroccan national merchant fleet currently consisting of only 16 vessels, it is projected that a steady stream of orders for around 80 vessels will follow over the next 15 years.
HD Hyundai Heavy Industries is drawing up a blueprint to secure the operating rights for the shipyard currently under construction from the Moroccan Ports Agency, implanting the technological DNA of Korean shipbuilding and winning orders for merchant vessels from the Moroccan government. Securing the operating rights for the Moroccan shipyard, which is adjacent to the Atlantic Ocean, also increases the likelihood of building vessels ordered by Morocco from European shipping companies that dominate the global shipping industry. The Korean shipbuilder also believes that it will be able to flexibly and meticulously respond to the market by significantly strengthening local sales capabilities based in the highly accessible Moroccan location.
HD Hyundai is also pursuing entry into India. HD Korea Shipbuilding & Offshore Engineering recently signed a comprehensive memorandum of understanding for long-term cooperation in the shipbuilding sector with Cochin Shipyard, India’s largest state-owned shipyard. The two companies will proceed with technical cooperation to improve productivity and ensure global-level quality, while also jointly exploring opportunities for vessel orders in the Indian and overseas markets.
Notably, through this agreement, HD Korea Shipbuilding & Offshore Engineering has gained access to Cochin Shipyard’s docks. The company is currently reviewing whether it is possible to build ships at Cochin Shipyard at the same level as in Korea. The Indian government has shown its commitment to fostering the maritime industry through roadmaps such as the India Maritime Vision 2030 and the Maritime Amrit Kaal Vision 2047. The goal is to reverse a structure where the country spends 110 trillion won annually on chartering foreign vessels due to its weak domestic shipbuilding industry, despite relying on shipping for 95% of its total trade volume. India has emerged as a major player in the shipbuilding industry, having announced plans to order 1,000 new vessels over the next 10 years.
HD Hyundai is also actively pursuing entry into the U.S. market, which has emerged as a new lever in the ROK-U.S. alliance. Last month, HD Korea Shipbuilding & Offshore Engineering signed a partnership for merchant vessel construction with the American merchant marine company Edison Chouest Offshore. The two companies will combine their shipbuilding capabilities to jointly construct medium-sized liquefied natural gas (LNG) dual-fuel container carriers at a local shipyard by 2028. They plan to expand their cooperation to other vessel types thereafter.
HD Korea Shipbuilding & Offshore Engineering’s global expansion is seen as a clever solution to the production capacity shortage caused by the shipbuilding industry’s supercycle. HD Korea Shipbuilding & Offshore Engineering operates shipyards in Ulsan (HD Hyundai Heavy Industries, HD Hyundai Mipo) and Yeongam, South Jeolla Province (HD Hyundai Samho), and also builds ships by leasing one dock at the Subic Shipyard in the Philippines. It is also constructing vessels in Vietnam through HD Hyundai Vietnam Shipbuilding.
The challenge is that the company already has a substantial backlog of orders. The annual construction capacity through domestic and international shipyards is about 180 vessels. As of the end of May, the order backlog stood at 451 vessels, equivalent to 2.5 years’ worth of work. The shipbuilding industry operates on a heavy-tail payment structure, where most of the payment is received upon the vessel’s delivery. Therefore, the sooner a vessel is delivered, the faster it is reflected in sales.
However, building a new shipyard is not easy. It requires a massive investment, and completion takes several years. The shipbuilding industry is a typical cyclical sector, facing downturns due to order gaps after a vessel replacement cycle ends. Building a new shipyard simply because orders are currently high could severely worsen the financial structure later due to fixed costs.
An official from the shipbuilding industry stated, “Cooperating with overseas shipyards allows us to easily secure docks and increase production capacity,” adding, “HD Hyundai is closely examining local shipbuilding capabilities to assess the potential for synergy.”