South Korea's President Wants $4B Fund to Build More Boxships

Office of the President of the Republic of Korea
Office of the President of the Republic of Korea

Published Apr 11, 2024 10:26 PM by The Maritime Executive

South Korea's president has pledged to invest $4 billion in financing to expand the nation's container ship fleet, adding about one million TEU in capacity to the global fleet. 

"We will provide 5.5 trillion won ($4 billion) worth of eco-friendly ship financing to national shipping companies to increase the size of their fleets and make them more eco-friendly," said President Yoon Suk Yeol. "Through this, we will expand the fleet of national shipping companies to a total of 2 million TEU by 2030, and increase the proportion of eco-friendly vessels among national ocean shipping companies to 60 percent."

If carried out, this would effectively double South Korea's fleet and add about 900,000 TEU to the global supply of cellular capacity, an increase of about three percent. The fleet is expected to remain oversupplied, because of a rash of new deliveries this year and next. 

National champion carrier HMM stands to benefit from the financing. The Korean government is HMM's majority owner with a 58 percent stake.

Yoon also pledged to boost Korea's port-automation technology sector with financing worth about $360 million, and to give Korean companies an edge in the green transition with a $725 million fund for green corridors and bunkering infrastructure. 

Japan has previously filed two trade complaints with the WTO over Korean industrial-policy programs of this type. The Korean government has historically denied that it subsidizes its shipbuilding industry, but Japan takes exception to the state financial support programs that Korea has implemented for domestic yards and vessel operators. The WTO's rules put limits on state-backed funds, loans and guarantees, though enforcement is difficult.