S. Korea to place orders for 200 vessels by 2020

S. Korea to place orders for 200 vessels by 2020
06/04/2018 https://www.hellenicshippingnews.com/s-korea-to-place-orders-for-200-ves...

South Korea will place orders for about 200 vessels in the next three years to help the ailing shipping and shipbuilding industry tide over weak global demand, the oceans ministry said Thursday.

The Ministry of Oceans and Fisheries unveiled the mid-term restructuring plan for the nation’s shipbuilding and shipping sector, which has been undergoing a bruising time following massive losses and Hanjin Shipping Co.’s bankruptcy in 2016.

“Following the bankruptcy of Hanjin Shipping, sales of South Korea’s shipping industry were cut by over 10 trillion won, and the tonnage of the deep sea containers has been cut in half,” Oceans Minister Kim Young-choon said in a meeting of economic-related ministers. “We have prepared a set of comprehensive measures to support the shipping and shipbuilding industries grappling with a protracted slump, intense competition and environmental regulations.”

The plan is to build 140 bulk carriers and 60 containers, which include 20,000 twenty-foot equivalent units (TEU) mega vessels and eight 140,000 TEU ships.

The ministry said it will establish a maritime industry promotion agency in July to support placing orders for new ships in the form of investment or guaranteeing the ship purchase program.

Hyundai Merchant Marine Co., the nation’s leading ocean-going shipping company, currently handles 330,000 TEU, the 14th-largest capacity in the world.

The ship purchase plan is expected to raise Hyundai Merchant’s shipping capacity to 1 million TEU by 2020, the ministry noted.

South Korea will also develop the eco-friendly, energy-efficiency containers to comply with the International Maritime Organization’s sulfur cap on bunkers, set to be enforced in 2020.

LNG-powered ships are considered an eco-friendly option to meet strengthened international regulations, but high costs have posed challenges to private shippers.

For the shipbuilding industry, the Ministry of Trade, Industry and Energy said it will carry out a comprehensive restructuring plan for the nation’s leading industry players and increase ship orders for local shipyards.

The shipbuilding industry, once regarded as the backbone of the country’s economic growth and job creation, has been reeling from mounting losses caused by an industrywide slump and increased costs.

The nation’s Big 3 shipyards — Daewoo Shipbuilding & Marine Engineering Co., Hyundai Heavy Industries Co. and Samsung Heavy Industries Co. — have been forced to undergo sweeping self-rescue programs worth some 11 trillion won (US$10.3 billion) since 2016.

The ministry said it will seek a new owner of Daewoo Shipbuilding, which is currently under a workout program led by the state-run Korea Development Bank (KDB), to reshape the nation’s shipbuilding sector and deal with a supply glut.

“(The government) will consider (Daewoo Shipbuilding’s) sales plan in the mid to long term, considering market conditions and its business normalization efforts,” the ministry said in a release.

It will also seek ways to consolidate midsized shipyards through mergers and acquisitions or strategic partnerships to raise their competitiveness in the global market.

Last month, state-run creditors put Sungdong Shipbuilding & Marine Engineering Co. under a court receivership, while calling on STX Offshore & Shipbuilding Co. to implement a self-rescue plan as they failed to turn around their money-losing businesses.

To help local shipbuilders stay afloat, the ministry said it plans to place orders for 40 public purpose ships, such as military vessels and patrol ships, worth 5.5 trillion won, by 2019.
Source: Yonhap