The South Korean government needs to do more to help its struggling shipping sector, Gerry Wang, founder and chief executive of containership lessor Seaspan, said in an interview with maritime news outlet Splash.
The South Korean government needs to do more to help its struggling shipping sector, according to Gerry Wang, the founder and chief executive of containership lessor Seaspan.
The country’s two largest shipping lines, Hanjin Shipping and Hyundai Merchant Marine (HMM), have been attempting to restructure debts and reduce charter rates for months now in an attempt to regain profitability in a difficult market. HMM, for its part, reached an agreement with shipowners earlier this month on a 20 percent rate reduction for chartered container vessels.
Hanjin, on the other hand, has failed to secure the 30 percent reduction in charter rates demanded by its creditors. The firm could face court receivership if it is unable to come to terms with shipowners as the charter rate reduction is seen as a crucial first step in its restructuring.
Wang told Bloomberg last week Seaspan would not accept any rate cuts for the seven container vessels leased by Hanjin, even going as far as to call the contract renegotiation illegal.
Now he is urging Seoul and the company’s creditors to come to its rescue.
“Hanjin Shipping, without a liquidity injection from controlling shareholder, the Cho family and the Korea Development Bank, will have a very challenging road ahead,” Wang said in an interview today with maritime news outlet Splash 24/7.
According to Wang, Hanjin is still a “well-run company,” but the line has “hit liquidity snags due to market conditions.”
“I hope the Korean government is fully aware that this is not just a Hanjin Shipping issue – it is concerning their shipbuilding industry, their exports, their national shipping lines, their reputation as law-abiding OECD country,” he added.
“If I were the Korean government I would stand firm behind Hanjin Shipping right away.”
Asked about Seaspan’s plans, Wang said the firm is aiming to build its own liquidity to make strategic acquisitions as assets may be sold below market value during the current down market for the shipping industry.
“We are focusing on enhancing our balance sheets and fire power as we believe crisis goes with opportunities,” he said.
Meanwhile, the Korea Shipowners’ Association has released a report in which it estimates the country’s economy would lose $19.13 billion and 5,400 jobs should Hanjin and HMM fold.
The Port of Busan, South Korea’s largest cargo gateway, for example, could could lose as much as $1.12 billion in the event both firms file for bankruptcy, according to the association.
Seaspan CEO: Seoul should ‘stand firm behind Hanjin Shipping right away’
