Bulk ship operator Korea Line has filed for court receivership to avoid bankruptcy, it said Thursday. Bulk ships transport timber, iron ore, grains and other large-volume cargo.
Bulk ship operator Korea Line has filed for court receivership to avoid bankruptcy, it said Thursday. Bulk ships transport timber, iron ore, grains and other large-volume cargo.
The company had been in financial difficulties due to dwindling vessel charter rates. During the bulk shipping boom in 2007-2008, Korea Line drastically expanded charter services by borrowing ships from other companies. But charter rates, which were around US$100,000 a day, dropped to around $20,000 after the 2008 financial crisis, said a shipping industry source. "Korea Line signed long-term contracts for the borrowed vessels, and 80 percent of its revenues go to paying for charter fees," the source added.
Chung Seo-hyun, a researcher at E*Trade Securities, said, "Korea Line appears to have filed for court receivership not under pressure from creditors but because it did not see any chance of improvement in its financial condition as operating funds ran out."
With W2.28 trillion (US$1=W1,118) in sales in 2009, Korea Line is the country's fourth-largest shipping company after Hanjin Shipping, Hyundai Merchant Marine and STX Pan Ocean.
