STATE-OWNED Korea Ocean Business Corporation (KOBC) has reportedly signed off on KRW6.15 trillion (US$5.4 billion) funding for Hyundai Merchant Marine (HMM) - much to the annoyance of European shipowners who see this as unfair subsidies.
Launched in July to prop up South Korea's struggling shipping industry, KOBC has already supported HMM with a US$740 million sale-leaseback transaction on 10 of its vessels.
HMM recorded a net loss of $1.1 billion last year and is facing another hefty deficit after registering a first-half loss of $371 million, earning it the dubious title of being the worst-performing carrier in the liner industry's cumulative $1.2 billion loss, reported UK's The Loadstar.
HMM confirmed on September 28 it had signed contracts for South Korean yards to build ships that are scheduled for delivery in the second quarter of 2020 and eight 15,000 TEU vessels for delivery a year later. The contracts have been underwritten by the KOBC.
Following the change of power in South Korea, sources have told London's Loadstar the government 'will do whatever it takes' to keep Korean shipping and shipbuilding afloat.
However, European shipowners and builders have decried the South Korean state aid and rallied around a recent statement by the EU that thrust unfair trade practices in Asia under the spotlight.
'The latest support measures from South Korea are clearly an example of unfair competitive distortions,' SEA Europe secretary general Christophe Tytgat said in a statement.
'By creating artificial demands through state aid South Korea has regrettably contributed to today's severe overcapacity in merchant shipbuilding and merchant shipping, with dramatic, far-reaching consequences for all market players, first for European shipbuilding and now also for European shipowners and the entire maritime value chain.'
There is speculation is that HMM will use its new ULCVs and underwriting from the South Korean government to support a new application to join THE Alliance.
Launched in July to prop up South Korea's struggling shipping industry, KOBC has already supported HMM with a US$740 million sale-leaseback transaction on 10 of its vessels.
HMM recorded a net loss of $1.1 billion last year and is facing another hefty deficit after registering a first-half loss of $371 million, earning it the dubious title of being the worst-performing carrier in the liner industry's cumulative $1.2 billion loss, reported UK's The Loadstar.
HMM confirmed on September 28 it had signed contracts for South Korean yards to build ships that are scheduled for delivery in the second quarter of 2020 and eight 15,000 TEU vessels for delivery a year later. The contracts have been underwritten by the KOBC.
Following the change of power in South Korea, sources have told London's Loadstar the government 'will do whatever it takes' to keep Korean shipping and shipbuilding afloat.
However, European shipowners and builders have decried the South Korean state aid and rallied around a recent statement by the EU that thrust unfair trade practices in Asia under the spotlight.
'The latest support measures from South Korea are clearly an example of unfair competitive distortions,' SEA Europe secretary general Christophe Tytgat said in a statement.
'By creating artificial demands through state aid South Korea has regrettably contributed to today's severe overcapacity in merchant shipbuilding and merchant shipping, with dramatic, far-reaching consequences for all market players, first for European shipbuilding and now also for European shipowners and the entire maritime value chain.'
There is speculation is that HMM will use its new ULCVs and underwriting from the South Korean government to support a new application to join THE Alliance.