State measures to intervene in the marine industry could hurt recovery efforts, shipping industry data analytics firm Alphaliner said in a report by trade publication World Maritime News.
Also according to Alphaliner, the billions of dollars of government aid pouring into carriers to keep them from tanking is hindering a much needed restructuring of the container shipping sector.
Citing examples, the report said the government of Taiwan approved almost $2 billion in funding with preferential interest rates for several Taiwanese shipping companies, along with a grant to reduce several port dues.
Yang Ming and Evergreen are expected to be major beneficiaries of the aid. The government’s finance package is part of a broader economic pump priming initiative, which also includes the provision of up to $16 billion in soft loans to be provided by local financial institutions.
The move follows South Korea’s plan to create a state-backed ship financing vehicle with an initial capitalization of almost $900 million. Its primary mission is to boost the financial capacity of South Korean carriers. It plans to provide a total of almost $ 6 billion in aid, mainly to help shippers acquire new vessels.
“The large amounts of financial aid which state-related entities in Taiwan and South Korea provided to protect the nations’ ailing shipping lines, come amid a slump in earnings, while shippers have been spooked by Hanjin Shipping’s bankruptcy,” Alphaliner said in the report.
China has also been known to intervene in the shipping sector, having provided almost $2 billion in financial aid to its two largest carriers, COSCO, and China Shipping between 2009 and 2015.
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