South Korea may aid afflicted carriers
The South Korean government is considering a plan to bolster the country’s sagging shipping industry, Korean press outlets reported this week.
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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Song said it was likely that more carriers in the country would fail even with government intervention.
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.”