In 2017, the bankruptcy of South Korean Hanjin Shipping Co. reduced the revenue of the Korean shipping industry by more than KRW 10 trillion. Container cargo volumes by Korean shipping companies were also reduced to less than a half. In April 2018, the Korean government held the 15th industrial competitiveness reinforcement Meeting, chaired by Strategy and Finance Minister Kim Dong-Yeon, and established the five-year plan for “maritime reconstruction”.
The plan focuses on the configuration of policy considering the ecosystem of maritime industries, including shipbuilding, ports, import & export, as well as finance for the shipping industry. The newly established Korea Ocean Business Corporation (KOBC) will play a very important role in the plan implementation.
The plan has three key directions: (a) securing stable cargo volumes through cooperation between Korean shipowners and shippers, (b) competitive and high-efficient shipbuilding, and (c) supporting Korean shipping companies’ management stability.
(a) Securing stable cargo volumes through cooperation between Korean shipowners and shippers
A forum for cooperation between ship owners and shippers will be operated in order to increase mutual trust as well as to promote joint benefits. For strategic cargo such as import of crude oil and coal, it has been proposed to increase the use of national shipping companies. At present, as indicated by the government, 28.1% of Korea’s crude oil imports and 72.8% of dry bulk imports are carried by Korean shipowners.
(b) Competitive and high-efficient shipbuilding
Korean shipbuilders are highly competitive when it comes to high-value-added ship-types such as LNG carriers, and large container vessels and tankers in the global market. They are eager to adopt new eco-friendly and smart solutions into the ships built in Korea to maintain shipbuilding leadership and technology gap with competitors.
The plan indicates that KOBC will finance the new building of more than 200 ships, including 140 bulk carriers and 60 container ships, as part of the five-year plan. Ship financing including installation of eco-friendly devices such as ballast water treatment systems and sulfur oxides reduction devices, will be facilitated through KOBC’ s programs (Investment in Ships, Investment in New Business, S&LB, Shipping Finance Guarantee, and New Business Guarantee). More information can be found at KOBC.
(c) Supporting Korean shipping companies’ management stability
KOBC supports the management stability and management innovation of Korean shipping companies while monitoring international shipping transactions and preparing for the volatility of the shipping market. It also assists Korean shipping companies in securing container terminals overseas to reduce direct costs.
After the announcement of the five-year plan, the Korean government declared its intention to order 140 new LNG fueled ships in the period 2019-2025. Starting with the first three LNG-fueled ships (one public ship owned by Ulsan City and 2 x 180 000 DWT bulk carriers from H Line Shipping Company), the 140 will be 40 publicly owned and 100 privately owned vessels. The main beneficiary will be small and medium-sized shipyards suffering from lack of new orders in Korea. LNG bunkering infrastructure, including three ship-to-ship bunkering vessels, will also be expanded according to the new LNG fueled shipbuilding plan in Korea. Given the Norwegian operational experience with LNG fueled ships and bunkering and the solutions for electric propulsion systems and fuel gas systems, there may be opportunities for Norwegian business in Korea.
Regarding new technology development in Korea, the industry decided to conduct a research project on a hydrogen powered ship for zero emission and to develop and demonstrate an autonomous surface ship. Korean efforts on maritime hydrogen are led by Pusan National University with industrial partners, and Korea Research Institute of Ships and Ocean Engineering (KRISO) is leading the project planning for the autonomous surface ship. They should go through preliminary feasibility study to launch the projects officially in the future.
On 2nd November 2018, Innovation Norway and Norwegian Embassy in Seoul organized the 4th Korea-Norway Greenship Seminar in Busan. This is a part of the continued efforts between Korea and Norway to contribute to the shared understanding of the current barriers to deployment of greener and smarter ship technologies and solutions, to exchange ideas on what can be done to reduce these barriers, and to allow the industry to meet to bring the worthwhile ideas forward. During the seminar last year, sustainable green shipping, LNG fueled ship, maritime hydrogen, ship intelligence and the autonomous ship were discussed between Korea and Norway with an audience of 90 experts. The bilateral seminar this year will continue to focus on the relevant topics for Korea and Norway reflecting industrial trends and interest in cooperation with Korean Ministry of Oceans and Fisheries and Norwegian Ministry of Trade, Industry and Fisheries.
For more information, please contact:
Senior Market Adviser
Innovation Norway, Seoul
T: +82 2 2096 2973
Ministry of Oceans and Fisheries: The announcement of the five-year plan of “maritime reconstruction” (Korean)
Mediapen: 140 LNG propulsion ships to small and medium sized shipbuilders by 2025 (Korean)
Arirang News: Korea Ocean Business Corporation launched to help South Korea’s flagging maritime industry (video, English)
Fairplay: Seoul unveils five-year plan to save its maritime sector (English).
Photo: Dooseok Kim, Innovation Norway