Shipowners push for guarantee fund quickly

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Shipowners push for guarantee fund quickly

The Korea Shipowners’ Association yesterday sent an official request to the National Assembly’s National Policy Committee to quickly establish a “shipping guarantee fund” to aid the maritime logistics industry.

Currently, the government plans to propose a bill to establish a shipping guarantee fund, ship finance institution or ocean finance institution to support ailing ship manufacturers or operators.

However, the association wants a guarantee fund to be the priority because it would be easy to establish and offer the most efficient support to shippers. The estimated initial capital needed for establishing a fund is 2 trillion won ($1.75 billion).

“Government support is needed to raise capital for quick establishment of the shipping guarantee fund,” the association said in a release. “Thoughtful policy consideration is required at this time in order to ensure the existence of Korea’s maritime shipping industry, the world’s fifth largest.”

The association also suggested a road map for supporting the entire ocean industry. It proposed establishing a shipping guarantee fund in Busan, then a ship finance institution and finally an ocean finance institution.

“Supporting credit for shippers is a practical way to help companies,” said an association official. “Since it offers a guarantee function, it will benefit small and midsize shippers as well.”

Local shippers have been struggling in recent years with mounting operating losses during the global economic slump.

In order to boost profitability, shippers this month raised freight fees. Hanjin Shipping, the nation’s largest shipper, raised fees on 20-foot container freights by $320 to America and $800 to northern Europe. Hyundai Merchant Marine also increased fees on Southern Europe routes by $750.

The Baltic Dry Index, the daily average of prices to ship raw materials issued by the London-based Baltic Exchange, has been rising recently, and that is seen as a good sign.

However, industry insiders said the revival of local shippers will not be easy as global competition has gotten fierce. Maersk, the world’s largest shipper, last month announced it will form an alliance with MSC Mediterranean Shipping and CMA CGM known as the P3 Network.

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