Korean Carriers Sell Ships to State

State-run fund Korea Asset Management Corporation is to take up to 62 ships from South Korean carriers for approximately$2.3 billion. Fund was set up in April to help cash flow for the industry. Under sale arrangements, companies will lease back the ships sold to the corporation.

The state run agency said it will purchase about 62 vessels from Korean shipping companies. Hanjin Shipping will sell 20 of 44 ships in its fleet. Hyundai Merchant Marine and STX Pan Ocean are also reported to be selling half a dozen vessels each.

The fund, whose establishment was announced in April and was established with contributions from Korean banks and private investors. Shipowners will lease back the ships from the fund and, eventually, buy them back when global conditions improve.

With container volumes down by as much as 20 percent and over-capacity leading to a collapse in liner rates, the stimulus is meant to assist the shipping companies. The fund will only subsidize ships less than 15 years old and was established because of the 97’-98’ Asian financial crisis which witnessed a selloff of ships to foreign companies.

The global container shipping industry has grown rapidly over the last five years, when 73 shipping groups owned 471 ships versus last year when 177 companies owned 819 vessels.

Samsun Logix, the country's ninth-largest shipping group, went bankrupt in March and Park Road collapsed in November, 2008. Daewoo Logistics also filed for court receivership recently due to financial trouble