South Korea Allocates $2.5 Billion to Boost Capacity of Local Container Shipping Lines
In a bid to bolster the domestically owned container shipping fleet, the South Korean government has earmarked approximately $2.5 billion to augment the capacities of SM Line and other South Korean feeder operators by 100,000 TEUs.
The initiative targets SM Merchant Marine (SM Line), Sinokor Merchant Marine, Korea Marine Transport Company (KMTC Line), Pan Ocean, CK Line, Namsung Shipping, and Dongjin Shipping, collectively possessing a fleet of around 400,000 TEUs.
The Ministry of Oceans and Fisheries aims to enhance the competitiveness of these operators in the intra-Asia shipping sector while facilitating the development of new routes amid intensifying competition.
Financial support will be facilitated through Korea Ocean Business Corporation (KOBC), which will acquire green bonds issued by the shipping companies or provide reduced interest rates for loans earmarked for eco-friendly shipbuilding. State-controlled policy lender Korea Development Bank (KDB) and KOBC may also invest a certain percentage in eco-friendly newbuildings.
Trade between South Korea and ASEAN nations is on the rise, with container volumes witnessing a 14% year-on-year increase in the first quarter of 2024, reaching 1,008,682 TEUs. This upward trend is expected to result in a significant boost in container flow between South Korea and ASEAN, aligning with President Yoon Suk-yeol’s ambition to elevate South Korea’s container shipping fleet to 2 million TEUs by 2030.
However, aggressive competition from mainline operators like Maersk Sealand and CMA CGM has posed challenges for South Korean feeder operators, who typically operate smaller ships. Nonetheless, initiatives like HMM’s plan to expand its fleet to 1.5 million TEUs by 2026 indicate efforts to navigate these challenges and strengthen South Korea’s position in the global container shipping arena.
