(Photo) HMM St Petersburg

A South Korean lawmaker has called on the country’s banks to become more involved in the ship leasing business to help HMM build its fleet.

Choi In-ho, from the ruling Democratic Party of Korea, is a member of the National Assembly’s Agriculture, Forestry, Livestock, Food, Marine and Fisheries Committee.

At last week’s  session of the National Assembly, South Korea’s parliament, Mr Choi noted that the gap between the country’s flagship liner operator, HMM, and its seven larger competitors stood at just under 1.9m teu.

He said: “HMM is having difficulties in ordering ships, due to the sluggish participation of commercial banks in the ship finance market after Hanjin Shipping collapsed in 2016. To be competitive, HMM needs to offer lower slot costs by having a larger fleet; otherwise, the company may face a crisis again.”

Mr Choi noted that the participation rate of commercial banks in the domestic ship finance market had fallen from 22% in 2014 to 7.3% in 2018.

He said: “To increase commercial banks’ participation in the ship finance market and reduce the shipping companies’ financial burden from newbuilding orders, it is necessary to quickly introduce the finance lease system in South Korea.”

HMM, the eighth-largest liner operator, has a total capacity of 821,769 teu, of which 545,134 teu is owned. However, the seven larger liner operators have all placed substantial newbuilding orders or acquired second-hand tonnage as container shipping enters one of its most lucrative periods in history.

Mr Choi said HMM’s seven larger rivals had an average capacity of 2.72m teu and had a combined orderbook for 3.28m teu.

He said HMM needed to expand its fleet beyond the dozen 13,000 teu newbuildings commissioned at Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering in June.

By 2025, when its newbuildings are delivered, HMM’s capacity will be around one million teu, while its larger rivals’ average fleet size will be 3.19m teu.

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