Shipping industry getting worse, fourth quarter unpredictable

The global economic depression is taking its toll on the domestic shipping industry.
According to the shipping industry on November 15, leading Korean shipping companies such as Hyundai Merchant Marine and Hanjin Shipping showed little growth in revenues up to the end of the third quarter this year compared to the same period last year. Operating profits plunged and net incomes turned into deficits.

Though HMM posted 4.189 trillion won in sales, a 6.6% increase compared with last year, operating profits decreased by 14.6% to 320.1 billion won and ordinary losses recorded 194 billion won.

HMM reflected Korean won exchange losses of 125.9 billion in its balance sheets and showed 165.7 billion won in total losses up to the end of the third quarter this year. It predicted a hard escape from losses by the end of the year in the absence of a more favorable market.

Hanjin Shipping also marked 3.54 trillion won in revenue for the same period, an increase of 13.7%. It, however, showed an 18.9% decrease in operating profits, down to 235.6 billion won.

An official at Hanjin Shipping said, "Sales circumstances have been worsening. For example, container rates dropped by 8% on average. This cut deeply into profits."

Though net profits were in the black by 106 billion won last year, it soaked up 63.5 billion won in losses, including currency exchange losses of 12.3 billion won.

Korea Line marked ordinary losses of 24.1 billion won, mostly due to currency losses, in spite of sales profits of 60.9 billion won in the third quarter of this year, an increase of 51% for sales profits compared to last year.

The third quarter of the year is usually regarded as the peak season for the shipping industry thanks to cargoes for the Christmas season and New Year's. But not this year. Economic depression and US retaliatory attacks for the Sept. 11 terrorist attacks have influenced cargo flows for the worse.

In addition, as foreign shipping companies recently aggravated rates by deploying larger container vessels, it is becoming more difficult to predict how things will go in the fourth quarter, an unusually slack season this year.

An official in the industry said, "It is seriously difficult for container sales with decreasing container cargoes. However, it is fortunate that oil prices and interest rates are weak."