The South Korean government will come to the rescue of the nation’s hard pressed shipping lines and shipbuilders. With many lines and yards already bankrupt, Seoul is racing to save existing names. It comes as both of the country’s top lines, Hyundai Merchant Marine (HMM) and Hanjin Shipping, have just sought restructuring and layoffs at the top three yards are expected to number more than 10,000 this year.
“Last year, the overall value of ship orders clinched by local shipbuilders stood at $10bn. But this year, new orders have nearly dried up, overwhelming shipbuilders’ ongoing self-rescue efforts,” Financial Services Commission (FSC) chairman Yim Jong-yong told a press briefing yesterday, also pointing out what he called worsening business conditions and little signs of recovery for the shipping industry as well.
The FSC outlined intensified restructuring measures for shipping lines and shipbuilders that include additional job cuts, wage reductions and sale of non-core assets.
“For survival, shipping firms have to succeed in lowering their charter costs without fail through renegotiations and they have to roll over their maturing debts. If they fail to reduce their charter costs, it will be inevitable for them to be placed under a court receivership,” Yim said.
