South Korean Government to Fund Shipping Modernization Program

South Korea' Financial Services Commission has announced $690 million in funding to help modernize aging passenger and cargo ships.

The plan aims to support the construction of 21 passenger vessels and 38 cargo vessels. Shipping companies will be reinbursed for up to 60 percent of the cost of the new vessels, and South Korea's state-run Korea Ocean Business Corp. will guarantee more than 95 percent of the loans. The Korea Development Bank will also fund 20 percent of the cost of vessels.

Yonhap reports that at present, 58 smaller shipping companies operate 166 passenger vessels, including ferries, to transport about 15 million people a year between the South Korean mainland and its islands. 780 other shipping companies run 2,013 cargo ships on domestic routes.

South Korea has lowered the maximum life of vehicle ferries to 25 years from the previous 30 years. Over 20 percent passenger vessels and 68 percent of cargo ships are over 20 years old.

Vessel safety has been an ongoing issue in South Korea since the 2014 sinking of the ferry Sewol. Last year, South Korean authorities opened another investigation into the incident which claimed the lives of 304 people; most were high school students. Sewol capsized on a trip from Incheon to the holiday island of Jeju. As the vessel began to slowly capsize, the Sewol's crew ordered passengers to remain inside to await rescue. At the same time, the captain and many members of the crew abandoned ship early and survived. 

At the time, the 20-year-old Sewol was overloaded with cargo that the cargo had not been fastened down securely enough. The ferry had previously undergone structural changes. The government was heavily criticized for its regulatory control and its handling of the emergency response.