• International Commerce and Information Review
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• v.14 no.4
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• pp.317-337
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• 2012

This study has investigated shipping finance systems in Korea and China, and extracted negative factors based on it to propose a way to develop the shipping financial system in Korea for shipbuilding industry and marine transportation. From after the global financial crisis in 2008 to right before the Lehman Brothers Holdings bankruptcy, shipping finance has been dominated by the major industrialized countries in Europe. However, the weight point is moving to the countries in Asia region such as Korea, Japan, and China based on relatively strong banking system and low interests rate. This study focused on the alternatives the current situation that the starter of shipping finance among three countries in Northeast Asia, South Korea is facing China's challenges. In the paper, shipping finance in Korea presented its defectives such as the limits of ship financing, lack of professional workforces, ever-present foreign exchange risks, and lack of understandings of the parties. As the countermeasures of them, it proposed establishing professional institute for ship financing, training professionals in financial industry, raising foreign credentials of won, and continuing associations between the parties. Even though we are the first Asian country introduced ship funds, the ship funds growth in China shall be under our eyes while we keep systemic networks between shipping, ship building, and ship financing.

• The Journal of shipping and logistics
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• v.34 no.4
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• pp.615-635
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• 2018

Using data from 2008 to 2017, this study analyzed the financial characteristics of offshore freight shipping companies in Korea, categorized by vessel type, and their impact on business performance. The analysis showed an upward trend in the overall debt ratio of offshore freight transport companies and differences in the financial characteristics of each vessel type as well as the major factors affecting business performance. In particular, the significant factors affecting the ROA performance of the business are the size of business and debt ratio in the LPG line; the growth rate in the bulk line; the size of business, debt ratio, and year in the general freight line; and the size of business, growth rate, entertainment expense rate, debt ratio, and year in the full container line. Therefore, each shipping company needs to recognize differences in key financial factors affecting its performance based on vessel type, implement proactive measures, and diversify its vessel portfolio.

• Journal of Korea Port Economic Association
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• v.27 no.2
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• pp.297-311
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• 2011

This paper deals with a strategic investment decision model for improving investment profit in shipping industry. Despite the quantitative expansion of Korean shipping business, many shipping firms have suffered financial difficulties due to financial and operating risks that result from the characteristics of capital-intensive business as well as of volatility of shipping markets. As a result, managers in charge of making an investment decision, particularly in tramper business sector, are required to take both financial and operating risk factors into consideration. Put it differently, managers are strongly recommended to avoid these risks by ship asset play; buy-low and sell-high, which results in considerable capital gain and cost reduction. In addition, managers in shipping industry are also recommended to consider the ship chartering investment alternative when the freight markets show extreme volatility as the case of 2008 triggered by sub-prime mortgage financial crisis in USA. For example, the BDI suffered plunging down from 1000 in 2008 to 100 in 2010. Consequently, the 4th largest shipping company in Korea, DAEHAN Shipping Co., has collapsed primarily due to excessive tonnage expansion during the peak time of bulk market. In sum, the strategic investment decision model, suggested in this paper, is designed to include such factors as capital gain by asset play, timely chartering for alternative shipping service, and optimization of operating profit by tonnage adjustment in accordance with change in the shipping markets concerned.

• Journal of Korea Port Economic Association
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• v.33 no.4
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• pp.17-36
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• 2017

In the modern economic context, it is apparent that there is a strong focus on the importance of global shipping industry. Recently, the world economic crisis has negatively influenced the industry with regard to both supply and demand, which has seen almost no sign of recovery. The fact that the entire industry is operating with low efficiency and at a low profit state has made all stakeholders anxious. This research examines the financial performance of the world's major shipping lines in order to give maritime stakeholders a closer look into the industry behind the ranking. Besides, the research evaluates the competitiveness of shipping companies in terms of financial ability and suggestions for strategic actions to stakeholders are provided. For these purposes, Fuzzy-C Means is used to cluster the selected lines into different groups based on their financial indices, namely liquidity, asset management, debt management and profitability. Levene's tests which are then followed by ANOVA tests are also utilized to assess the robustness of the clustering outcomes. The results indicate that liquidity, solvency and profitability act as the main criteria in the classification problem.

• Journal of Navigation and Port Research
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• v.48 no.2
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• pp.109-115
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• 2024

To develop a shipping company insolvency prediction model, we sampled shipping companies that closed between 2005 and 2023. In addition, a closed company and a normal company with similar asset size were selected as a paired sample. For this study, data of a total of 82 companies, including 42 closed companies and 42 general companies, were obtained. These data were randomly divided into a training set (2/3 of data) and a testing set (1/3 of data). Training data were used to develop the model while test data were used to measure the accuracy of the model. In this study, a prediction model for Korean shipping insolvency was developed using financial ratio variables frequently used in previous studies. First, using the LASSO technique, main variables out of 24 independent variables were reduced to 9. Next, we set insolvent companies to 1 and normal companies to 0 and fitted logistic regression, LDA and QDA model. As a result, the accuracy of the prediction model was 82.14% for the QDA model, 78.57% for the logistic regression model, and 75.00% for the LDA model. In addition, variables 'Current ratio', 'Interest expenses to sales', 'Total assets turnover', and 'Operating income to sales' were analyzed as major variables affecting corporate insolvency.

• Korea Trade Review
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• v.47 no.5
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• pp.181-200
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• 2022

After the COVID-19 pandemic, a global economic downturn and a recession in the shipping market are expected, it is important for domestic shipping companies to establish appropriate strategy in response to the recession. Accordingly, domestic shipping companies should grow into integrated logistics companies that combine shipping and logistics in the future. And for this purpose, it is necessary to actively promote logistics integration with external shipping and logistics companies. This paper presents the direction of logistics integration for domestic shipping companies to develop as integrated logistics operators with competitiveness in the global shipping market, and presents detailed alternatives. Domestic shipping companies lack the infrastructure such as ships, port terminals, and warehouses, so they have a weak capacity to independently promote logistics integration. At the shipping company level, a logistics integration promotion strategy should be established, and accordingly, logistics infrastructure, service network, and logistics integration operating system should be established. The government should provide tax benefits for logistics integration, financial support for M&As led by domestic shipping companies, a standardized information sharing system, and preparation of educational courses for nurturing digital manpower.

• Journal of Navigation and Port Research
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• v.32 no.3
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• pp.185-192
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• 2008

This paper firstly aims to classify the applicability of the Balanced Scorecard approach to Korean ocean-going shipping firms' management system. The applicability of this approach from Korean shipping firms using Balanced Scorecard will create more effective and efficient organizational performance with reflecting non-financial indexes and making a balance among missions in organization. Secondly, the paper suggests positive information and theoretical evidences to improve Korean shipping firms' management system with examining an availability of the Balanced Scorecard as one method of management tools. So these factors are analysed by structural equation model. This study provides CEO in Korean ocean-going shipping firm the guideline and availability of the Balanced Scorecard as to what kinds of factors should be considered and what is the most critical factor to adopt the BSC into their business.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.19
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• pp.96-118
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• 2003

Government tries to revise the article 25 in Korea Maritime Transport Act which describes subject of coastal carriage for exported-imported container cargoes. The subject of coastal carriage will be replaced coastal carrier by ocean liner carrier according to the revised article 25. By adopting the revised article, coastal shipping industry will be deteriorated in terms of returns on investment, sales and etc. Even though the revision is inevitable to harmonize the flow of exported-imported container cargo movement, coastal shipping industry should be developed and restructured to get competitive power and to set up an efficient international logistics system. To enhance competitive power of coastal shipping companies successfully, government must realize the importance of coastal shipping, and aid the industry through various methods such as arrangement of law and regulation, indirected financial assistance, decrease of tax rate, etc.

• Journal of Navigation and Port Research
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• v.44 no.6
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• pp.541-549
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• 2020

This study conducts differential analysis on the financial positions of Korean shipping companies before and after the bankruptcy of the H carrier, looking specifically at their financial ratios, profit and loss patterns, and other factors related to their financial operation. Firstly, it was discovered that major measures of financial health, such as average assets per carrier, were not affected by the bankruptcy of the H carrier. However, despite this, most carriers experienced large changes in profits and losses, with total sales and shipping revenues averaging 424.5 billion won and 381.7 billion won respectively before the bankruptcy, but falling by half to 252.1 billion won and 234.6 billion won after the bankruptcy. Additionally, charter revenues and expenses also dropped by more than half. EBIT/sales and pre-tax revenue margins were also heavily affected after the bankruptcy, with both figures averaging 8% and 3% respectively before the bankruptcy, but falling into the negative range at -2% and -8% post-bankruptcy, resulting in significant deterioration in operational profitability. The study concludes that there is an urgent need to establish a global sales network, improve cost structures, and consistently secure stable cargo in order to increase Korean carriers' profitability. Of all financial measures, liquidity and total asset efficiency were identified as the most severely-impacted by the H carrier bankruptcy, thereby requiring the most pressing policy addressing.

• The Journal of Industrial Distribution & Business
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• v.10 no.1
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• pp.19-27
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• 2019

Purpose - The purpose of the paper is to examine disconnection between supply and demand shipping market, which means shipowner has determined to raise capacity in bust period. Research design, data, and methodology - The research method to be applied is first to look into conceptual theory about shipping market, and then to study imbalance of supply and demand situations in shipping on crisis, and next, to analyses paradoxical aspects traced. Results - Shipping market is a volatile and cyclic characteristics, and its situations have to be examined very carefully. Since financial crisis has broken up in 2008, it is natural to think that world trade volumes has reduced rapidly, which means demand for shipping service has fallen, and accordingly, tonnage should be stagnated as well. However, shipping companies have put capacity into market as unexpectedly. This is because of economy of scale and time lag. Here, this can be explained in terms of paradox that is proved in this paper. Conclusions - From careful research in this paper, it is found that supply and demand are not always got along with market situations, in other words supply side could be working well, in spite of depression time of demand situations in world shipping markets.