The government may act as it has done recently with the country’s construction and shipbuilding sectors, with analysts calculating that small- and medium-sized carriers could be under severe threat from poor demand. Two medium-sized carriers, Park Road Corp. and Samsun Logix, have either gone bankrupt or filed for bankruptcy in the past year.
The country’s shipping majors — Hanjin Shipping, Hyundai Merchant Marine and STX Pan Ocean — are seeing declining profits, as are most global carriers.
“Since shipping companies borrow vessels from each other, if one goes bankrupt it directly affect the others,” Song Jae-hak, an analyst at Woori Investment and Securities, told Joong Ang Daily.
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Analysts believe the government will be especially keen to protect Korean carriers from the threat of foreign takeovers, something less worrisome in the construction sector, which recently received a government-led restructuring effort.
“Even if a builder is restructured (and is forced to sell the apartments it has been building), the apartments will still be in Korea,” a finance ministry official told the newspaper. “But if a shipping company is restructured, in many cases, it will have to sell the ships to foreign companies at dirt-cheap prices.”
