THE Taiwanese government will provide up to NT$60 billion ($1.9 billion) to try to stave off a Hanjin-like collapse of its container shipping companies, the Ministry of Transportation and Communications (MOTC) announced on Tuesday.
The funds will be provided in the form of a credit line with preferential, below-market interest rates to shipping companies with accumulated losses over the past four quarters, explained MOTC Deputy Director-General Yeh Hsieh-lung in a statement.
“The global shipping industry is going through a tough time. These loans are part of the government’s efforts to help local shippers,” said Yeh.
The principal beneficiaries of the loan package will be Taiwan’s two biggest shipping companies, Evergreen Marine Corp. and Yang Ming Marine Transport Corp., according to a report by the Wall Street Journal.
The government explicitly said it wants to prevent a collapse similar to Korea’s Hanjin Shipping Co., at one time the world’s seventh-largest carrier, which folded at the end of August when creditors rejected a restructuring plan of its $5.7 billion debt and forced the company into bankruptcy. Deputy MOTC minister Wang Kwo-tsai cited the failure of Hanjin Shipping and its knock-on effects for South Korean industry and citizens, according to the Taipei Times.
“The nation relies on shipping firms to transport goods that come in large quantities, which is key to our economic development. The Hanjin Shipping collapse shows us that the government has to provide support to the industry before the damage becomes uncontrollable,” Wang was quoted as saying.
“We have submitted the plan to the Executive Yuan [central government]for final approval so that it can be quickly implemented to help shipping firms battle the worldwide slump in the industry,” he added.
Rumors have circulated in recent weeks about a possible merger between Evergreen and Yang Ming on the heels of several other large-scale planned mergers in the industry. Most recently, Japan’s K-Line, NYK Lines, and Mitsui OSK Lines merged to form what will be the world’s third-largest container line. In Europe, German giant Hapag-Lloyd and United Arab Shipping Company appeared to move a step closer to completing their planned merger, with favorable indications from the EU Antitrust Commission.
Evergreen and Yang Ming both issued statements denying a planned merger, however, and the bailout offered by the Taiwanese government may have also been intended to prevent it, a report by Reuters said.