The new state backing will finance orders for megaships as the container-ship operator struggles to stay afloat
South Korea’s Hyundai Merchant Marine 011200 -5.38% is getting another $5 billion in state funding to finance a series of new orders for megaships as the company tries to compete with bigger Asian and European rivals in a difficult container shipping market.
HMM, the country’s de facto flag carrier after the collapse of Hanjin Shipping Co. in 2016, will spend $2.8 billion to buy 20 large container vessels from South Korean shipbuilders. The rest of the money will likely be used to buy container terminals, according to people involved in the matter.
The state intervention to prop up the struggling container ship operator reflects the willingness of Asian governments to stand behind national carriers that move billions worth of exports to Western markets and the local shipyards that build their vessels.
The financing was partly arranged by Korea Ocean Business Corp., a government body established in July to support a shipping sector that is considered critical to the country’s economy but which has been foundering since a global downturn in maritime business.
“Let’s say it’s a government investment,” one person involved in the matter said. “Korea must keep its place in global shipping. It’s a national interest issue.”
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