Korea is chasing U.S. Navy contracts. Japan wants to challenge that.

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Korea is chasing U.S. Navy contracts. Japan wants to challenge that.

Published: 30 Jun. 2025, 14:01 Updated: 30 Jun. 2025, 19:25

Audio report: written by reporters, read by AI

Crewmembers of the Japanese Maritime Self-Defense Force's JS Shimakaze guided missile destroyer hold a U.S. flag toward the U.S. Navy's USNS Harvey Milk oiler during an exercise in the Virginia Capes’ operating area in the Atlantic Ocean on Sept. 24, 2024, in this photo provided by the U.S. Navy. [REUTERS/YONHAP]

Japan has declared the revival of its shipbuilding industry, setting up a new front in its economic rivalry with Korea as both nations vie for lucrative contracts with the U.S. Navy.

Bolstered by a deep security alliance with Washington, Tokyo plans to expand its shipyard infrastructure, signaling a strong return to a sector it once dominated.

Japan is moving to sharpen its competitive edge by ramping up domestic shipyard capacity, according to insiders in the industry on Sunday. The Nikkei reported on June 20 that the Japanese government and the ruling Liberal Democratic Party are considering establishing national shipyards to be operated by private companies.

Japan had slashed its shipyard capacity from 138 docks in the 1980s to just 46 through sweeping industry restructuring. Now, it wants to rebuild that industrial base under direct government leadership.

Tokyo is also weighing the inclusion of ship hulls as "specified critical products" under its Economic Security Promotion Act and exploring the creation of a 1 trillion yen ($6.9 billion) fund to support facility investments.

For Korea, which has been eyeing the U.S. Navy ship market, this means heightened competition.

The nuclear powered aircraft carrier USS George Washington arrives at Japan Maritime Self-Defense Force Yokosuka base in Yokosuka, south of Tokyo, on Nov. 22, 2024, in this photo provided by Kyodo News. [AP/YONHAP]

Japan, which built half the world’s ships in the 1960s, saw its global new order share plummet to just 6 percent, or 4.39 million Compensated Gross Tonnage, last year as it lost ground to Korea and China.

Yet experts say Japan still retains advanced shipbuilding and maritime operational capabilities.

Data from maritime industry tracker VesselsValue show that Japan’s fleet asset value stood at $231.4 billion last year, second only to China’s $255.2 billion.

“Ships play a critical role in an export-driven economy, so Japan tends to view shipbuilding as a matter of national security,” said Yang Jong-seo, a senior researcher at the Export-Import Bank of Korea. “By pushing for national shipyards, Japan is making clear it intends to directly build the ships it needs for security.”

The USS John S. McCain, under repair at a dry dock, is seen after a rededication ceremony at the U.S. Naval base in Yokosuka, southwest of Tokyo, on July 12, 2018. [AP/YONHAP]

Japan also holds a clear edge over Korea in terms of direct collaboration experience with the U.S. Navy.

Since the Korean War broke out in 1950, the U.S. Seventh Fleet, which oversees the Pacific, has maintained and repaired its vessels at Yokosuka Naval Base near Tokyo Bay. Washington, which maintains a tight diplomatic and security partnership with Tokyo, last year officially began talks to include Japan in Aukus, its security alliance with Britain and Australia.

“The Japan Maritime Self-Defense Force has weapons systems that are more closely aligned with the U.S. Navy than Korea’s, and its experience working with the United States is also broader,” said Shin Seung-min, a retired rear admiral and visiting professor at Pusan National University.

A panoramic view of the Philadelphia Naval Shipyard in the United States is pictured in this photo provided on June 21, 2024. [HANWHA GROUP]

Korea’s shipbuilders aim to compete by leaning on their rapid production capabilities and by investing directly in the United States. They hope to sidestep regulations like the Jones Act, which bars foreign-built ships from operating in U.S. coastal trade.

Hanwha Ocean, which acquired the Philly Shipyard in Philadelphia last year, is even considering reflagging ships built in Korea to the United States to expand business opportunities.

HD Hyundai, after entering a technology partnership with Huntington Ingalls, the United States’ largest military shipbuilder, in April, signed a strategic deal on June 19 with Edison Chouest Offshore — owner of five U.S. shipyards — to collaborate on commercial vessel construction.

“Korea’s biggest strengths are its unrivaled production capacity and technological sophistication,” said an insider from Korea’s defense industry. “If the U.S. Navy wants ships that can immediately boost its fleet capabilities, Korean shipyards are the answer.”

A panoramic view of the Edison Chouest Offshore Shipyard is pictured in this photo provided on June 22. [HD HYUNDAI]

Experts stress that building a long-term relationship with the U.S. Navy is crucial.

“The U.S. Navy is only beginning to explore cooperation with Korean shipbuilders,” said Rhee Shin-hyung, a professor of naval architecture and ocean engineering at Seoul National University. “Even if it doesn’t pay off right away, this is the time to lay the groundwork for a strategic partnership.”

Jang Sang-sik, head of the Korea International Trade Association’s international trade research office, said steady trust-building would pay dividends.

“For trade negotiations with the Donald Trump administration, shipbuilding cooperation remains Korea’s biggest card,” he said. “Starting with MRO [maintenance, repair, and overhaul] projects and deepening ties with the U.S. Navy will be a huge asset for Korea.”

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY OH SAM-GWON [[email protected]]