10 Years After Hanjin Shipping's Bankruptcy... KMPC’s 17.5 Trillion Won Becomes Pillar for Rebuilding Korea’s National Fleet

156 Shipping Companies Supported Over 8 Years Since Launch; 86% Allocated to Management Stabilization and New Vessels
Financial Support Expanded to SMEs; Backing for Eco-Friendly Ships and Overseas Logistics Networks

An HMM container ship is docked at Busan Port. Photo by Jinhyung Kang aymsdream@

The bankruptcy of Hanjin Shipping in 2016 dramatically reshaped the landscape of South Korea's shipping industry. With the disappearance of a national oceangoing carrier formerly ranked seventh in the world, the competitiveness of Korea's national fleet in handling import and export cargoes deteriorated sharply. As the shipping industry downturn prolonged, private financial institutions began to pull out of ship financing, and even surviving shipping companies found it difficult to secure new vessels or liquidity.

Korea Maritime Promotion Corporation (KMPC)’s large-scale policy financing played a pivotal role in enabling the Korean shipping industry to overcome the shock of Hanjin Shipping's bankruptcy and return to the global stage. The support provided by KMPC began with supplying liquidity to struggling shipping companies and supplementing the national fleet with additional vessels but has since expanded to encompass small and medium-sized carriers as well as port and logistics companies. Now, the focus is shifting toward preparing the next wave of competitiveness, such as the transition to eco-friendly vessels and securing overseas logistics networks.

According to KMPC on September 10, policy financing supplied to 156 shipping companies from its establishment in July 2018 through the end of June this year totaled approximately 17.5 trillion won. Established by integrating Korea Ocean Business Corporation, Korea Marine Guarantee Insurance, and Korea Shipping Trading Information Center, KMPC operates under the Ministry of Oceans and Fisheries as a dedicated policy financing agency aimed at rebuilding the domestic shipping industry following the collapse of Hanjin Shipping in 2016.

The allocation of the 17.5 trillion won provides insight into the course of rebuilding the shipping industry over the past eight years. About 49% of the total support was used for management stabilization, followed by 37% for securing new ships. 11% was allocated to ports and logistics, and 3% went toward upgrading eco-friendly facilities. Thus, policy funding was concentrated on overcoming immediate liquidity challenges while enhancing the foundation of the national fleet by securing new ships.

The scope of support was not restricted to large oceangoing shipping companies alone. Of the 156 firms that received financial support, around 63% were small and medium-sized carriers, outnumbering large and mid-sized companies (37%). Excluding HMM, their share of total financial support reached approximately 73%. While the immediate focus following Hanjin Shipping's bankruptcy was restoring the competitiveness of oceangoing carriers, policy financing has since expanded to include vessel acquisition and management stabilization for small and medium-sized shipping companies.

HMM serves as a representative case. After Hanjin Shipping's bankruptcy, HMM remained Korea's sole oceangoing container carrier and at one point faced a severe management crisis. By leveraging policy funding provided by KMPC and the Korea Development Bank, HMM secured new ships and improved its financial structure, laying the groundwork for normalization. With an expanded fleet and strengthened business competitiveness, HMM recorded sales of 10.8914 trillion won and operating profit of 1.4612 trillion won last year, becoming the eighth-largest container carrier in the world.

Jongyun Bae, Head of ESG Management Team at the Korea Ocean Business Corporation, is explaining the process of rebuilding the shipping industry and the role of the Korea Ocean Business Corporation at a press corps seminar held in Osaka, Japan on the 7th. Photo by Nahum Kang

The shipping industry is a representative cyclical sector, with periods of boom and bust. Acquiring ships requires large amounts of capital, but during downturns, shipping companies’ profitability and financial conditions worsen, making it difficult to secure necessary funding through private finance alone.

This challenge is particularly acute for South Korea, as the country relies on maritime transport for the majority of its import and export volumes. If the national fleet weakens, reliance on foreign carriers increases and bargaining power over freight rates diminishes. In times of global supply chain disruption or emergency, securing shipping space for import and export cargo in a timely manner becomes even more difficult. This is why KMPC prioritizes the sustainability and competitiveness of the shipping industry over short-term financial returns in its policy financing.

The challenges that policy financing must address are also changing. While the past priority was to support struggling carriers through normalization and supplement lost shipping capacity, today, large-scale investment in eco-friendly transitions has become a new burden. As the International Maritime Organization (IMO) has strengthened carbon emission regulations, national carriers can no longer delay investments in eco-friendly fuel vessels and related facilities.

In response, KMPC is expanding financial support for the introduction of eco-friendly ships and facility upgrades. To raise the resources needed for the shipping industry's green transition, it has diversified its funding methods, such as issuing blue bonds. Beyond financing, KMPC is also broadening its role into non-financial areas, such as diagnosing business status and competitiveness of shipping companies and providing tailored consulting services.

The scope of support is expected to further expand from shipping to all aspects of the maritime industry, including ports and logistics. KMPC has set the goal of becoming a “comprehensive maritime support institution for a global maritime powerhouse” by 2030 and is working to reinforce global competitiveness, secure new growth engines, and promote the AI transition of the maritime sector through financing. Its targets include supplying 24 trillion won in maritime finance and raising the proportion of new business revenue to 20% by 2030. Over the long term, KMPC aims to grow into a comprehensive maritime support institution with 100 trillion won in assets and 500 employees by 2040.

If the past eight years have been about rebuilding the national fleet, future policy financing will be tasked with preparing for the next crisis and industrial transformation. An Byunggil, President of KMPC, said, “The past eight years have been a period of rebuilding, with the Korean shipping industry heading back out to sea after crisis. Going forward, we will not only continue to support the stable growth of the shipping industry but also expand support for eco-friendly and digital transformation and new growth sectors, serving as a reliable pillar for Korea to leap forward as a global maritime powerhouse.”

This content was produced with the assistance of AI translation services.