Shipping Revenue Recovers to 95% of Pre-Hanjin Crisis Level... "51 Trillion Won Target for 2025"

Ministry of Oceans and Fisheries Announces Performance Review of 5-Year Shipping Reconstruction Plan and Direction for Shipping Policy Management

'Strengthening Support Centered on the Korea Ocean Business Corporation, Supporting Management Innovation of Container Shipping Companies, and Establishing Infrastructure to Support the Shipping Industry'

Moon Sung-hyuk, Minister of Oceans and Fisheries. (File photo)

[Sejong=Asia Economy Reporter Joo Sang-don] Last year, the sales revenue of shipping companies recovered to 37 trillion won, reaching the level before the bankruptcy of Hanjin Shipping (39 trillion won). The Ministry of Oceans and Fisheries presented a goal to achieve shipping sales of 51 trillion won by 2025 by supplementing the five-year shipping reconstruction plan and steadily implementing existing measures.

According to the Ministry of Oceans and Fisheries on the 12th, last year’s shipping sales revenue recovered from 29 trillion won in 2016, after the Hanjin incident, to 37 trillion won. During the same period, the shipping capacity increased from 460,000 TEU to 650,000 TEU, and the controlled fleet tonnage recovered from 79.94 million tons to 85.35 million tons.

This is due to the government establishing the Korea Ocean Business Corporation, an institution responsible for stable ship acquisition and management support for shipping companies, in July 2018, and supporting a total of 4.283 trillion won to 49 shipping companies over the past two years.

The Ministry of Oceans and Fisheries has promoted strengthening a symbiotic cooperative relationship between shipping companies and cargo owners by introducing the 'Excellent Ship-Cargo Owner Company Certification System,' which provides various benefits such as corporate tax reductions to companies that have made efforts for mutual growth between shipowners and cargo owners to secure stable cargo, one of the goals of shipping reconstruction. As a result, the loading rate of major cargoes has improved to levels exceeding those before the bankruptcy of Hanjin Shipping. Applications for the Excellent Ship-Cargo Owner Company Certification have been accepted since July this year, and when selecting public bulk cargo transport operators, the 'Comprehensive Evaluation Bidding System Pilot Project' was implemented, improving the winning bid rate by more than 10%.

Also, based on the cooperation of the domestic container shipping alliance 'Korea Shipping Partnership (KSP),' Janggeum Shipping and Heung-A Shipping merged to become a top 20 near-sea container shipping company globally. This resulted in a 12.9% increase in sales and a turnaround to operating profit. Through three rounds of restructuring of Asian routes, supply was adjusted by a total of 13 vessels, resolving excessive competition among domestic shipping companies.

Regarding ship orders by domestic shipping companies, the Ministry of Oceans and Fisheries evaluated that the foundation for win-win cooperation between the shipping and shipbuilding industries has begun to be established by ordering 164 vessels (estimated at 10.74 billion USD) out of the 200 vessels targeted in the five-year shipping reconstruction plan by July this year.

Going forward, the Ministry of Oceans and Fisheries has set goals such as shipping sales of 51 trillion won, controlled fleet tonnage of about 100 million tons, and ocean-going container shipping capacity of 1.2 million TEU by 2025 by supplementing the five-year shipping reconstruction plan. To achieve this, they plan to promote ▲strengthening support centered on the Korea Ocean Business Corporation ▲supporting management innovation of container shipping companies ▲establishing infrastructure to support the shipping industry.

First, ship-owning companies will own vessels and lease them to shipping companies at reasonable prices to alleviate the financial burden and high debt ratio caused by ship ownership, allowing shipping companies to focus on generating profits through improved transportation services. To this end, from the second half of this year, the Korea Ocean Business Corporation will add an operating lease business to its ship purchase and re-chartering (S&LB) project, and in the mid-to-long term, will promote the establishment of a specialized leasing ship-owning company involving shipping companies, shipbuilders, and public institutions to enhance the cost competitiveness of shipping companies and create a foundation for stable ship investment even during downturns. Additionally, if situations like the COVID-19 pandemic arise requiring urgent liquidity support for shipping companies, they plan to revise the Corporation Act within this year to exceptionally provide credit guarantees, and review the feasibility of introducing an advanced shipping tax system (accelerated ship depreciation) to establish a new ship ordering system. Alongside this, they will support strengthening the capabilities of domestic shipping companies and risk management through developing an independent freight index, providing ship price fluctuation databases, and promoting comprehensive consulting projects.

Management innovation of container shipping companies will also be supported. First, based on the 2022 performance, the domestic shipping company HMM will establish a scientific decision-making system for performance monitoring and continuous evaluation to achieve net profit. They plan to expand container ship capacity from the current 590,000 TEU to 1 million TEU by 2022 and pioneer new routes such as the U.S. West Coast, South America, and the Middle East. Furthermore, to expand overseas logistics facilities and increase investment in land transportation, they will secure container yards in China, strengthen inland transportation services in the Americas through cooperation with U.S. railroad companies, and develop truck and air-linked transportation services within Europe.

They will also strengthen infrastructure supporting the shipping industry, such as seafarers and overseas logistics. To provide overseas employment opportunities for seafarers, they will support overseas shipping company onboard training for young maritime officers in Europe and other regions, and through the APEC Seafarer Network (SEN) established in Busan last October, support international onboard training projects for seafarers in the Asia-Pacific region. They plan to prepare guidelines for expanding remote medical services, realizing compensation for injured seafarers, and guaranteeing the rights of trainee seafarers, and manage strict compliance.

Moon Sung-hyuk, Minister of Oceans and Fisheries, said, "While the first half of the five-year shipping reconstruction plan focused on restoring the shipping industry's status to the level before the bankruptcy of Hanjin Shipping, the latter half must prepare for a higher leap." He added, "For the sustainable development of Korean shipping, we will faithfully implement the shipping policies announced today during the remaining plan period."

This content was produced with the assistance of AI translation services.