Difficulty has arisen for Hanjin Shipping and Hyundai Merchant Marine after reports that its high debt levels will make it hard for the shipping lines to tap into a US$1.2 billion shipping fund laid out by the South Korean government, according to the Journal of Commerce.
Choi Kyung-hwan, Minister of Strategy and Finance for South Korea, said: “The shipbuilding industry has been restructuring through capital increases and downsizing in order to restore profits, while shipping companies are working on their own to overcome liquidity issues.
“Therefore, if the shipping companies can bring debt ratios to 400% and below, this $1.2 billion fund will help them to place ship orders.”
The South Korean government recently set up the huge shipping fund as a way to support the country’s shipping industry by allowing shipowners to use guarantee orders of vessels, according to the Maritime Executive.
The scheme will also allow shipowners to buy and sell ships with lower financial risk.
The country has also recently announced plans to carry out research on the feasibility of ultra large container ships at its ports for generating a return on investment.