"Korea Nearly Recovers to Pre-Hanjin Shipping Bankruptcy Level... Secures 40 Trillion KRW in Sales and 1.05 Million TEU in Shipping Capacity"

President-led Expanded Economic Ministers' Meeting on the 15th to Review Shipping Industry
Year-end Sales Target of 40 Trillion Won and 1.05 Million TEU Offshore Container Capacity
Liquidity Support for Small and Medium Shipping Companies... Support for HMM's New Container Ship Orders on Transpacific Routes in the First Half

[Sejong=Asia Economy Reporter Moon Chaeseok] The government announced that South Korea's shipping industry is regaining competitiveness to the level before the 2016 Hanjin Shipping bankruptcy, setting this year’s targets at 40 trillion won in sales and 1.05 million TEU in deep-sea container fleet capacity.

On the 15th, the Ministry of Oceans and Fisheries reported support measures for the shipping industry's leap forward at an expanded economic ministers' meeting chaired by President Moon Jae-in. The meeting was attended by key economic ministers including Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance; Sung Yun-mo, Minister of Trade, Industry and Energy; Moon Sung-hyuk, Minister of Oceans and Fisheries; as well as Bae Jae-hoon, CEO of HMM, and Hwang Ho-sun, President of the Korea Ocean Business Corporation (KOBC).

According to the Ministry of Oceans and Fisheries, last year, South Korea’s shipping industry recorded sales of approximately 36 trillion won and a deep-sea container fleet capacity of 800,000 TEU. Sales approached the pre-Hanjin Shipping bankruptcy level of 39 trillion won. Fleet capacity is also moving toward 1.05 million TEU as of August 2016. Notably, the national deep-sea shipping company HMM turned a profit for the first time in 10 years, posting an operating profit of 980.8 billion won last year.

To achieve this year’s targets of 40 trillion won in sales and 1.05 million TEU in fleet capacity, the Ministry plans to increase support for small and medium-sized shipping companies centered on KOBC and focus on securing cost competitiveness through expanding new ship orders by national shipping companies. Based on the expectation that global logistics networks will stabilize in the second half of the year, the core strategy is to strengthen liquidity support for shipping companies. The Ministry believes that the shipping industry is showing signs of recovery due to policy support through the 'Five-Year Shipping Reconstruction Plan' announced on April 5, 2018, combined with improvements in shipping market conditions.

First, the Ministry plans to strengthen the industry's safety net through KOBC’s Korean-style shipowner business, new guarantees, and COVID-19 financial support. KOBC will purchase up to 10 vessels this year and lease them at reasonable charter rates as part of the shipowner business, helping shipping companies acquire ships at lower costs. Additionally, a new guarantee business system will be completed within the first half of the year. In December last year, the KOBC Act was amended to provide a legislative basis for guarantees not only for asset acquisition but also for credit loans, contract bidding, and performance. The scale of the COVID-19 financial stability support project will be increased from 661.4 billion won last year to 681.9 billion won this year to help small and medium-sized shipping companies secure liquidity.

Moreover, the Ministry will support national shipping companies in replacing high-cost charters and aging vessels with high-efficiency newbuild ships to enhance cost competitiveness. Specifically, support will be provided within the first half of the year for HMM’s new container ship orders on the trans-Pacific route. Strengthening cost competitiveness on the trans-Pacific route is deemed essential to achieve the 1.12 million TEU target by 2025. For the Europe route, 20 ultra-large container ships will be deployed to establish a high-efficiency, low-cost structure. For small and medium-sized shipping companies facing difficulties in financing, support programs from policy financial institutions will be prepared and promoted.

Finally, the Ministry will deploy at least two temporary vessels from national shipping companies each month and prioritize allocating 50% of shipping space to small and medium-sized shipping companies. This aims to stabilize export logistics by prioritizing support for small and medium-sized shipping companies, which have relatively more capacity, over large shipping companies, thereby securing logistics space. Through this, the Ministry plans to actively resolve logistics difficulties faced by export companies.

A Ministry of Oceans and Fisheries official said, "The Ministry will continue to faithfully implement the 'Five-Year Shipping Reconstruction Plan' established in 2018 to enhance the global competitiveness of our shipping industry and do its best to support the rebound of South Korea’s economy through unwavering support for export-import logistics."

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