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Korea prepared to weather economic storm

Korea prepared to weather economic storm

Seoul: Lee Jae-Gyoon, Korean vice minister for land, transport and maritime affairs has outlined a number of upcoming government initiatives and activities to help shipping "weather the storm". Speaking at the Korean Register of Shipping's inaugural Seoul International Maritime and Shipbuilding conference, the minister admitted that the current economic downturn had hit harder than forecast, but announced that the government has a number of plans in store to help advance technical and design standards for ships, strengthen safety management systems, enhance focus on environmental issues, heighten collision damage compensation and help reduce global piracy.

Other topics under discussion included whether the financial squeeze would result in greater use of older vessels (due to lesser financing requirements) or scrapping of said vessels and if lower rates would ease the pressure on shop operators to use inexperienced crews and delay maintenance onboard ships. However, some speakers felt that low freight rates would cause additional problems for the insurance sector as owners may file more claims in an attempt to cover maintenance and running costs.   

The consensus on shipyards was that plummeting freight rates and vessel values had reduced liquidity but "those building high quality vessels would continue to prosper, particularly in the current environment of ever increasing regulation". Specific issues facing the Korean builders - and echoed in many yards across Asia - included concern with the 255% increase in the price of steel plate (since 2002) and a shortage of skilled workers. More than 119,000 skilled workers were employed in the main Korean yards and the requirement was growing year-on-year, with many yards now relying on subcontractors.

However, KR chairman Mr Oh Kong-Gyun remained optimistic. "Korea remains the world's premier shipbuilding nation and one of the top global ship-operating countries," he said.  [11/11/08]