Current crisis served as stepping stone for renewal

In the midst of sever hardships for the domestic shipping industry, the Ministry of Maritime Affairs and Fisheries (MOMAF) as well as the Ministry of Government Administration and Home Affairs (MOGAHA), and the Ministry of Planning and Budgets (MPB) should have been more supportive of the maritime and logistic industries, said the industry.

Under bitter economic circumstances in the wake of the Asian Currency Crisis in 1997, the shipping industry has still been experiencing troubles in doing businesses. Of course, though some problems came from inside the industry, such as a slowdown of export and import cargoes and severe competition in the industry, MOMAF, some pointed out, failed to properly support the industry with its relatively weak position among the economic ministries.

Korea ocean-going shipping companies couldn't afford to obtain new vessels because of the stringent 200% debt to equity ratio regulation. What was worse, trade liberalization in the industry caused an overall increase in vessels, an abundance of sub-standard vessels, and deteriorated rates in near sea trades to fire-sale prices, all of which contributed to severe damage to Korean ocean-going shipping companies.

Shipping companies that ordered new vessels already had difficulties in repaying their debts, but things went from bad to worse when vessel prices tumbled. For example, Choyang Line sold all its vessels (leaving it with an entirely chartered fleet) in order to meet the debt to equity ratio and finally fell into bankruptcy.

Dire circumstances prevented Korean ocean-going shipping companies from planning for the coming year. While belt-tightening management only led to shrinking companies, it really only produced outdated services. The continually tumbling economy determined the future for the relatively powerless shipping companies.

Finally, shipping companies decided to maintain efficient and profitable systems through vessel exchanges and to cut costs in human resources. Korean ocean-going as well as near sea going shipping companies further suffered in the wake of vessel over-supply, bottomed out rates, and massive currency exchange losses.

In the meanwhile, Hyundai Merchant Marine suffered from difficulties in handling Hynix Semi-conductor, the Mt. Kumgang tourism plan, and a Hyundai group holding company. Luckily, the Mt. Kumgang tourism business passed over to the Hyundai Asan Group. However, as the number of tourists plunged, Hyundai Asan also decided to abandon the Mt. Kumgang business.

If there weren't enough sore spots already, shipping agencies and associations for overseas shipping companies along with Korean flagged shipping companies are to be merged into one category in accordance with newly changed regulations. To the chagrin of the organizations, legislation took precedence over talks. The merge will likely be carried over to next year.

Shipping agencies also have been affected by economic turmoil and cargo decreases in the aftermath of the 9/11 terrorist attacks.