Shipping industry warming up for new shipbuilding

The move to order new vessels in domestic shipping companies is coming back to life thanks to debt to equity ratio deregulation.

According to Younhap News, the Korea Shipowner's Association reported that since the Asian currency crisis, leading Korean shipping companies have not ordered new vessels due to debt ratio increases and related regulations. However, they are now actively considering new vessel orders.

SK Shipping ordered a 138,000 CBM LNG vessel last January, and is scheduled to place an order for three additional VLCC (Very Large Crude oil Carrier) for between 200,000 - 300,000 tons early next month, while Hanjin Shipping is in the process of behind-the-scenes negotiation to secure foreign capital for two 6,000 TEU vessels in the second half of this year. Pan Ocean Shipping delivered two new vessels at the end of last year and is prepared for another 1 - 2 chemical tankers this year.

Hyundai Merchant Marine also has the plans to secure several container vessels in the latter half of this year, and is now thinking about whether to order new vessels or to charter some on a long-term basis.

A concerned party said, "Deregulation of the debt to equity ratio in the shipping industry will put new vessel orders back on track from July, and contribute to increased traffic in some service.”

Meanwhile, according to the Korea Shipowner's Association, new ship orders amounting to 1,350,000 tons in 1995, 1,310,000 tons in 1996, and 1,010,000 tons in 1997. There were no orders in 1998 or 1999. In 2000, there were orders for a mere 23,000 tons.