US port fees on Chinese ships likely to benefit Korea

Korean shipping companies and shipbuilders are emerging as potential beneficiaries of the U.S. Trade Representative’s (USTR) recent decision to impose new port fees on ships built or operated by Chinese firms.

Citing the low share of Chinese-built vessels in HMM’s fleet, analysts predict that more freight owners will turn to Korea’s largest container carrier when shipping goods to the United States.

“Chinese-built vessels account for only 6 percent of HMM’s entire container fleet — the lowest among global shipping companies,” Hana Securities analyst Ahn Do-hyun said. “Since HMM has not placed any orders with Chinese shipyards, it is unlikely to be affected by U.S.-China tensions.”

Among HMM’s 83 container ships, five were built in China.

Two of those are rented and will be returned soon, while the remaining three are used mainly for Southeast Asian routes.

“HMM is expected to gain the upper hand over competitors in securing cargo volume, as it is free from U.S. regulations on Chinese-built ships,” Meritz Securities analyst Oh Jung-ha said.

Korean shipbuilders are expected to benefit from global shipping companies reducing their reliance on Chinese shipyards.

“Major shipping companies are now under pressure to avoid Chinese shipyards, which have built most of their vessels,” Korea Investment & Securities analyst Kang Kyung-tae said. “Korean shipbuilders are likely to take market share from Chinese rivals in segments like tankers and container ships.”

While Chinese yards have led the market for vessels that do not require advanced technology, Korean shipbuilders dominate in high-value-added sectors such as liquefied natural gas (LNG) and liquefied petroleum gas (LPG) carriers.

Following the U.S. government’s signal to curb China’s shipbuilding dominance, ExxonMobil has postponed a planned LNG bunker vessel contract with a Chinese shipyard.

Source: Koreatimes