The South Korean government has announced plans to carry out research on the return on investment at ports through the investment in ultra-large container ships, including the impact that these ships will have on ports and terminals, according to the Journal of Commerce.
The South Korean Ministry of Finance said: “Over the past 10 years, the maximum size of container ships has increased almost twofold. There're even 21,000–22,000 TEU ships on order.
“While large vessels would bring about savings in transport costs, these also require port facilities to be expanded, involving high infrastructure investment costs.”
In order to assist both companies, the government would work with state policy lenders, and candidate companies will undergo pricing and technical assessments.
This move comes amid concerns that two of South Korea’s biggest shipping lines, Hyundai Merchant Marine (HMM) and Hanjin Shipping were struggling to find the finance to invest in more ships, leading to the decision to merge their companies.
Read a Technical Paper on Busan Terminal New Container Terminal
Hanjin Shipping recently sold its stake in a container terminal in Busan, which has placed it in a more favourable position financially, while HMM denied claims of a merger altogether after selling a convertible bond for around US$200 million.
If the alliance goes ahead, the wider supply chain could be affected by putting pressure on ports and terminals, with the inherent issues associated with high peaks and dwell-times.
The wider issue of alliances can also be seen at a number of ports around the world. The biggest issues currently are that alliances drive up operational costs and capital expenditure, while also placing more pressures on dockworkers to turnaround ships.
Read a Technical Paper by Neil Davidson at Drewry on the challenges faced by mega-ships
