Shipping association demands active reorganization to build size and strength

Lim Chang-won Reporter Posted : 2018-04-09 10:43 Updated : 2018-04-09 10:43
글씨작게 글씨크게

[Yonhap News Photo]

SEOUL -- The liquidation of Hanjin Shipping was a big policy mistake made by the government of South Korea's ousted ex-president Park Geun-hye because it weakened the competitiveness of South Korean shippers and helped foreign rivals increase their clout, a top official at the Korea Shipowners Association (KSA) said.

"After a bitter remorse, we need to take a right direction and approach strategically," KSA Vice Chairman Kim Young-moo told Aju News.

South Korean shippers have been in trouble due to falling freight rates stemming from an oversupply of ships and a protracted slump in the global economy. In February last year, Hanjin which used to be South Korea's top container carrier terminated its 40-year-long business.

Hyundai Merchant Marine controlled by creditors has absorbed some of Hanjin's assets to lead the domestic shipping industry, followed by SM Line. Hanjin's liquidation was painful as South Korea lost 109 service networks, Kim said, accusing policymakers of sticking to the financial logic that taxpayers' money would not be wasted to rescue the troubled shipper.

"Policy banks concentrated on collecting their debt rather than strengthening the competitiveness of our shipping industry," Kim said. "We should take a lesson from our failed corporate restructuring."

Denmark, Germany and China have strategically fostered their shipping industry when South Korean shippers were burdened with debt repayment, he said, pointing to the importance of policy decisions by each country.

Because shipping is a crucial industry that can be used as a strategic resource in times of emergency. For this reason, Kim said his association had tried hard to stop Hanjin's bankruptcy. "The government's lack of understanding and awareness of the shipping industry caused a great loss to our export industry."

The global shipping industry will be controlled by three major shipping groups in Europe, China and Japan, Kim said, suggesting Hyundai Merchant Marine and SM Line should be integrated into a single ocean container carrier capable of handling two million TEU and other smaller offshore shippers into two or three units with 500,000 TEU. TEU (twenty-foot equivalent unit) is an inexact unit of cargo capacity often used to describe the capacity of container ships and container terminals.

Kim said South Korean shippers should actively order ships. "The global shipping industry was oversupplied even during the 2008 financial crisis, but orders were still placed to replace old ships with more efficient ones."