Introduction
In the first half of 2026, the capacity utilization rate of Chinese shipyards was at a high level of over 90%; during the same period, the operating rates reported by South Korea's three major shipbuilding companies were 106.1, 100.2 and 100 respectively. The operating rate exceeded 100%, which in itself shows that production capacity is not a knob that can be turned up casually.
But what is really worth asking is another thing: What exactly does the word "capacity" refer to?
When news reports say "how many thousands of tons of annual production capacity" a shipyard has, they are talking about deadweight tons; when company announcements say "how many ships the annual construction capacity is", they are talking about the number of ships; when industry statistics say "how many thousands of revised gross tons of new orders are received", they are talking about workload. The three numbers can be attached to a shipyard at the same time, and they are not consistent with each other, but they are both correct.
What this lecture will talk about is how the shipyard's production capacity is calculated - which rulers are used to measure it, which one is the shortest, and why it cannot be twisted in the short term.
Section 1: Production capacity is not the area, it is the ability to pass the bottleneck
One or four rulers
The production capacity of a shipyard is measured by four rulers at the same time, and the final value is determined by the shortest one.
ruler
something to measure
Where is it stuck?
Dock and slipway
The cycle of "from staging docking to undocking" can be completed several times a year
Dock room dimensions, docking period days
Lifting capacity
How many sections can be lifted at one time
Gantry crane tonnage and span
Yard and paint shop
After the segments are made, where should they be placed and where should they be painted?
Area and turnover rate
manpower hours
How many welder hours can be invested in a year?
Number of skilled workers and turnover rate
The relationship between the four rulers is in series, not in parallel. No matter how big the shipyard is, if the sections cannot be supplied, the docking period will still be idle; no matter how many sections are built, if the painting shop is full, the sections will have to be piled in the open air to wait; no matter how large the yard is, if there are not enough welders, the total section will not be long enough to be docked.
Production capacity is equal to the throughput capacity of the bottleneck process, which is equal to the speed of the slowest link in the entire factory.
2. Why can the operating rate exceed 100%?
The basis for calculating the operating rate is "standard operating capacity" - the theoretical output calculated based on standard working hours and standard shifts. When the actual operating rate reaches 106, it means that the actual working hours invested are 6% more than the standard working hours: night shift, overtime on holidays, and the original maintenance window is also used.
This is about exhausting elasticity, not expanding production. What will happen after elasticity is exhausted, the manufacturing industry has a very consistent pattern: equipment failure rates increase, quality fluctuations increase, the probability of safety accidents increases, and the loss of skilled workers accelerates. This is especially obvious in the shipbuilding industry, because the most demanding types of work in this industry - welders, assemblers, and plumbers - have physical limits on their physical strength and concentration.
So "the operating rate exceeds 100%" is a good number on the report, but it is a tightened bow in the workshop.
Third, production capacity also has a time dimension
The same dock can produce four boats this year, but it does not mean that it can produce four boats next year. Because "how many boats can be produced" depends on how many days each boat stays in the dock, and the number of days depends on the type of ship.
This means that production capacity is not a fixed value, but a quantity that changes with the product structure. This is very important, it is the key to understanding all the content that follows.
Picture 1
Section 2: Correcting Gross Tonnage – Putting Different Ships on the Same Ruler
1. Why are the deadweight tons not enough?
A 210,000-ton bulk carrier or a 174,000-cubic-meter liquefied natural gas carrier. Which ship has a greater workload?
Calculated by deadweight tonnage, the bulk carrier is more than two and a half times larger. Calculated by the actual man-hours invested by the shipyard, technical difficulty and output value, the answer is exactly the opposite. Measuring shipbuilding output by deadweight tonnage is equivalent to measuring the workload of the factory by cargo hold volume.
Therefore, the industry uses another unit: corrected gross tonnage, the English abbreviation of CGT. The idea is to multiply the gross tonnage by a coefficient that reflects the complexity of the ship type, and convert different ships into "standardized workload."
2. What does the formula look like?
The current common system is the power function system implemented in January 2007. The formula is:
CGT = A × GT^B
Where GT is the gross tonnage, A and B are coefficients given by ship type. Commonly used groups:
Ship type
A
B
bulk carrier
29
0.61
Oil tanker (double hull)
48
0.57
chemical tanker
84
0.55
LNG carrier
32
0.68
Note the meaning of B: It describes "the larger the ship, whether the unit workload increases faster or slower." The B of the LNG ship is 0.68, the highest among the four - meaning that the larger the ship, the workload increases faster than other ship types, because it not only has more steel, but also a more complex liquid cargo containment system.
This system replaces the hierarchical look-up table method of 1994. The look-up table method would jump near the boundaries of ship types, and ships of the same tonnage would be classified into two grades with slightly different results; the power function is continuous and can better reflect the impact of larger ships and new regulations.
Three, three ships placed together to look at
Take three typical ships and place the deadweight tonnage and corrected gross tonnage side by side:
Ship type
Total tons (10,000)
Deadweight tonnage (10,000)
Revised total tonnage (10,000)
210,000 tons bulk carrier
约 10.9
21
约 3.4
300,000 tons crude oil tanker
约 16.0
30
约 4.4
One hundred and seventy-four thousand cubic meters of LNG ship
约 11.3
约 8.5
约 8.7
There are two counter-intuitive things in this table.
The first point: the gross tonnage of a crude oil tanker is 40% higher than that of a liquefied natural gas ship, but the corrected gross tonnage is only half of it. The second point: the deadweight tonnage of a liquefied natural gas ship is only 40% that of a bulk carrier, and the corrected gross tonnage is 2.6 times that of a bulk carrier.
For the same shipyard, the workload of building three bulk carriers a year is about the same as building one LNG ship. This is why the indicator of "how many ships can be produced per year" of a shipyard is almost meaningless - it depends entirely on what kind of ship is being built.
4. Nominal production capacity and effective production capacity
In industry statistics, the global shares of China's three major shipbuilding indicators (completions, new orders, and orders on hand) in terms of corrected gross tonnage were 50.3%, 68.2%, and 55.4% respectively in 2024. In the same year, the share of new orders in terms of deadweight tonnage was 76.94%, and in terms of corrected gross tonnage it was 69.88%.
The difference between the two calibers is seven percentage points. The meaning of this "scissor difference" is very straightforward: among the ships received by Chinese shipyards, the proportion based on tonnage is very high, and the proportion based on workload is slightly lower - indicating that conventional ship types built in batches account for a large proportion, while the proportion of ships with the highest cost per unit of workload still has room for improvement.
For enterprises, the difference between them is "nominal production capacity" and "effective production capacity": nominal production capacity is the upper limit of output when the facility is at full load, and effective production capacity is the amount that can actually be delivered under the current order structure, current manpower allocation, and current supply chain conditions. The difference between the two is where management capabilities come into play.
Picture 2
Section 3: Shipyard turnover - the hardest constraint
1. How was the dock period squeezed out?
The dock is the most expensive, irreplaceable, and difficult-to-replicate asset of a shipyard. A dry dock capable of building 300,000-ton ships requires an investment of one billion yuan and a construction period of several years, and it cannot be built only if you have money - it requires deep-water coastlines, geological conditions, waterways, and approvals.
Because it cannot be copied, all productivity articles in the industry are essentially written on the same thing: how to make this dock rotate several times a year.
Jiangnan Shipbuilding's approach is to increase the number of batches in the dock from six to eight, and shorten the docking period of a single ship from sixty days to forty-five days. The result of these two figures is: the annual production capacity of the same shipyard is equivalent to four more ships.
The key lies in how the forty-five days are saved. It is not about working overtime to rush the work, but relying on completing the work before the general section is docked - piping, equipment, iron fittings, painting, everything that can be done in the ground workshop is done on the ground, and only closing and outfitting are completed after docking. This is called "completeness of the general section".
The higher the integrity, the less cross-construction in the dock, the fewer process conflicts, and the less waiting. This is how the docking period is suppressed.
2. What is the idea of “one dragging two”?
The intelligent joint workshop of China Merchants Shipbuilding Co., Ltd. Qingdao Shipyard adopts a "one-to-two" U-shaped layout along the coastline - a large dry dock that simultaneously supports the continuous cycle construction of two ships. With digital twins and intelligent scheduling, the goal is to make the docking period utilization rate close to 100%.
The core of this idea is to eliminate the "empty window of the dock". Traditionally, only one ship is built at a time in a dock. After undocking, the dock must be cleared, erected, and prepared. During this period, the dock is empty. "One to two" staggers the rhythm of the two ships. One ship is closing and the other is preparing to undocking, so the occupation of the dock is continuous.
The project has a total investment of 500 million yuan and a construction area of 50,000 square meters. After it is put into operation, the annual steel processing capacity is expected to be 94,000 tons. 500 million yuan is exchanged for a dock that can be used year-round. This is a good deal in years when ship slots are tight - because one more turn of the dock will create one more ship slot that can be sold.
3. Why does it take three to five years to build a new shipyard?
There is a consensus in the industry: to build a new large-scale shipyard, it will take at least three to five years from approval to completion and operation. The project of China Merchants Weihai Shipyard is a reference: a new 490-meter shipyard, equipped with a 2,200-ton gantry crane, a total investment of 460 million yuan, and a construction period of 16 months - this is an upgrade and transformation within the existing factory area, and does not include the time for preliminary approval and shoreline demonstration.
There is also a policy detail that needs to be paid attention to: the production capacity index of this project comes from "capacity replacement". In September 2025, the local government approved the use of the 360,000 tons of shipbuilding capacity that the original Weihai Xintaiyuan Shipbuilding Company had withdrawn from each year for the construction of the project on the basis of equal replacement.
It is not simply "increasing", but "vacating the cage and replacing the birds." This means that in the current policy environment, the overall national shipbuilding production capacity is controlled, and the new production capacity must be offset by the withdrawal of production capacity. This is another layer of reinforcement of production capacity rigidity at the institutional level.
Fourth, lifting capacity is another threshold
With a dock, it is also necessary to be able to hoist sections in. The tonnage of the gantry crane determines how big a single section can be - the larger the section, the fewer welds that are closed in the dock, and the shorter the docking period.
Therefore, in the shipyard expansion in recent years, the upgrade of cranes and the expansion of docks almost always appear in pairs: the 2,200-tonne one in Weihai, the ultra-large floating dock and the 6,500-tonne offshore crane introduced by Hanwha Marine Planning, the logic is the same.
How heavy the total section can be hoisted determines how many meters of welding are required in the dock; how many meters of welding is required in the dock determines how many days the docking period will last. This is a causal chain that directly leads to production capacity.
Picture 3
Section 4: Invisible production capacity—yard, painting and people
1. The staging yard is a buffer zone, not a warehouse
After the segments are built in the workshop, they have to wait for docking. Where are they piled up while waiting? Stockyard.
Insufficient storage yard area will bring about two consequences: First, sections can only be stacked in the open air, and wind, rain and salt spray increase the workload of secondary rust removal; second, the number of bad luck increases - in order to make way for other sections, a section may be lifted and moved several times, each time involving crane man-hours and risks.
Mature shipyards manage the yard as a rhythmic buffer zone: arrange it in docking order, try to get it there at once, and reduce bad luck. This level of management can be seen by outsiders from photos of the factory area - there are two types of factories: those where the sections are neatly arranged, the passages are clear, and arranged in order, and those where there is time to fill in the gaps and exploit every opportunity.
Second, the paint shop is often an invisible bottleneck
Painting requires a closed space, temperature and humidity control, exhaust gas treatment, high factory building costs, and strict environmental approvals. Modern shipbuilding pays attention to "integrated shell and outfitter painting" - the proportion of painting in stages is getting higher and higher, and a large amount of paint work is moved from the dock and the dock into the workshop.
Therefore, the passing capacity of the painting workshop has become a prerequisite for whether the segments can be docked on time. The impact on the delivery schedule is the same as queuing up the segments outside the workshop for painting and queuing up outside the dock for docking.
Three, people are the slowest multiplier
Of the first four rulers, three are facilities, which can be bought with money and built with engineering. The fourth ruler is manpower, which cannot be bought or built.
A welder who can weld important parts of the ship's hull needs to be trained in years from entering the factory to working independently. During this period, he has to practice and take exams repeatedly in different positions, different materials, and different welding positions, and he must also be familiar with the factory's equipment, process regulations and inspection procedures. The employment characteristic of this industry is precisely the high liquidity - when there are many orders, every company is competing for people, and the turnover rate of skilled workers increases accordingly.
Facility expansion is subject to approval and funding, while manpower expansion is subject to time. The former is slow due to process, while the latter is slow due to physiology. This is why although there is money, orders, and space, production capacity still cannot be increased.
Four, three barriers stacked together
Putting the previous sections together, the resistance to capacity expansion comes from three levels:
barrier
Specific content
time scale
site
Deepwater shorelines are scarce, and it will take three to five years to get approval for a new shipyard, and production capacity needs to be replaced.
three to five years
manpower
Skilled jobs such as welders require a long training period and increased mobility
several years
Willingness
After ten years of losses in the last cycle, companies dare not blindly build new production capacity
a cycle
The third layer is the most easily overlooked. The shipbuilding industry continued to be in a downturn from 2010 to 2020, a large number of small and medium-sized shipyards closed down, and leading companies experienced long-term losses. This memory allowed management to maintain restraint during the boom period - prioritizing the optimization of ship structures rather than blindly paving the way.
These three lines are stacked together to form the rigidity of production capacity. It explains why orders are scheduled until 2030, but production capacity is still tight: it is not that the shipyard does not want to take more orders, but that it really cannot do so.
Section 5: How to judge the quality of a shipyard’s production capacity
First, see what unit it uses to describe itself.
Those who say "how many ships are built per year" are mostly conventional ship types; those who say "how many thousands of revised gross tons are delivered per year" are aware of the product structure. When the former hears the numbers, they should ask: What kind of ship?
2. The docking period and the number of non-watching docks
The number of docks can be checked, but the docking period needs to be asked. For the same two docks, one docking period lasts forty-five days and the other ninety days, the production capacity is doubled. Behind the docking period is the integrity of the total section, which is the level of the previous process.
Third, look at the status of the staging yards
A neat, orderly yard, arranged in docking order, is evidence that the planning system is in operation; a crowded, chaotic, and repeatedly unlucky yard indicates that planning and execution are out of touch, and production capacity will inevitably be compromised.
Fourth, see if the type of ship it connects to is changing.
If a shipyard switches from bulk carriers to large container ships, and from conventional fuel to dual fuel, for the same facility, the corrected gross tonnage of output will increase, the number of ships will decrease, and the unit output value will increase. The product structure itself is part of the production capacity.
Five, look at its overtime intensity
The operating rate has been above 100 for a long time, indicating that the flexibility has been exhausted. The next action of such enterprises is usually equipment investment or price increase, rather than continuing to squeeze people.
Kyushu judgment
1. Production capacity is not the area, but the ability to pass the bottleneck process. The four rulers of shipyard, lifting, yard, and manpower are connected in series, and the shortest one determines the overall situation. When asking how many ships a shipyard can build, the correct question is not "How big are you?" but "Where is your slowest link?"
2. The deadweight tonnage measures how much the ship can load, while the modified gross tonnage measures how much work the factory has to do. The deadweight tonnage of a LNG ship is only 40% that of a bulk carrier, and the workload is 2.6 times that of a bulk carrier. Once the ship type and structure change, the annual output of the same dock will change - which is why "how many ships per year can be produced" is an almost meaningless indicator.
3. The docking period is the hardest number in the shipbuilding industry. The docking period relies on the front-end processes rather than overtime in the dock. The number of batches has increased from six to eight, and the docking period of a single ship has increased from 60 days to 45 days. One dock is equal to the production capacity of four more ships. The method is to move the work to the ground workshop to complete, and let the dock only do closing.
4. Among the three barriers to production capacity expansion, the hardest one is time, not money. It takes three to five years to acquire the site, and several years to train manpower, and the memory of losses in the previous cycle makes the management afraid to spread the word. These three things are stacked together, resulting in the seemingly contradictory situation of "orders are scheduled until 2030, but production capacity is still tight."
5. To look at the production capacity of a shipyard, it is enough to look at four numbers: docking period, yard status, product structure, and overtime intensity. None of these four numbers are written in the brochure, but none of them can deceive people. The true level of production capacity is hidden in the beat, not the area.
Risk warning: This article is for industry communication reference only and does not constitute any investment advice. The market fluctuates greatly, so please make prudent decisions based on your own risk tolerance. Jiuzhou in the article is a virtual character, and some of the information is obtained by crawling the Internet.