Shipping industry's crisis triggered by selfishness

As ramifications from Hanjin Shipping’s court receivership have spread to a global logistics crisis, the government and the ruling Saenuri Party announced a string of measures belatedly on Tuesday. The Foreign Affairs Ministry, the Oceans and Fisheries Ministry, and the Strategy and Finance Ministry will request 46 countries to give approval for stay order (order for prohibition of forfeiture) to prevent Hanjin Shipping’s vessels from being seized by overseas ports, and provide long-term low-interest emergency loans worth more than 100 billion won (90 million U.S. dollars) to the troubled shipping giant.

“Related ministries including the Oceans and Fisheries Ministry must urgently implement emergency shipping measures including deployment of substitute vessels to ensure that exporting and importing companies do not face delays in shipment,” Prime Minister Hwang Kyo-an told a Cabinet meeting on Tuesday. It is hard to understand why the government is only announcing emergency measures belatedly now. When creditors rejected to offer financial aid to Hanjin Shipping on Aug. 30, Financial Services Commission (FSC) Chairman Lim Jong-ryong said, “We have examined diverse countermeasures including Hanjin’s partner firms and oceangoing freight transportation.” But the government in reality overlooked the possibility that a decision to exit a company, sending shock waves through not only the industry concerned but also the entire economy. In the wake of the Asian financial crisis in 1997, the South Korean government formed a taskforce and devised measures to deal with logistics, and asked courts in other countries for cooperation prior to placing shipping companies under court receivership, but capabilities of bureaucrats seem to have waned for the past 20 years.

The government organizations, including the Oceans and Fisheries Ministry, the Financial Services Commission, and the Strategy and Finance Ministry, and Hanjin Group have lost "golden time" as they only made selfish bids to seek their own survival. Oceans and Fisheries Minister Kim Young-seok served only as a liaison between Korea Development Bank and Hanjin Group, and handed over the authority to restructure the company to the Financial Services Commission, stepping out of Hanjin Shipping’s restructuring. The FSC chairman hided himself behind the excuse "self-rescue measures by majority stakeholder is the top priority,” while Strategy and Finance Minister Yoo Il-ho just made political remarks, saying, “We will minimize economic and industrial impact” soon after the decision to place Hanjin Shipping under court receivership. Hanjin Group Chairman Cho Yang-ho was not enthusiastic about injecting his private wealth to reviving Hanjin Shipping, and is suspected of having funneled Hanjin Shipping’s quality assets to Hanjin Group. Hanjin Shipping is "another Sewol Ferry" that has remained latent within ourselves.

If the entire shipping industry gets damaged in the wake of Hanjin Shipping's bankruptcy, the government will lose credibility, and thus find it difficult to maintain momentum to speed up restructuring across all industries. The government needs to first closely analyze the process of discussions between the government, creditors and Hanjin Shipping right before it decides Hanjin Shipping’s court receivership, and also should single out those responsible for the logistics fiasco. The government must completely reshuffle the system for policy implementation so that best experts will form a taskforce for restructuring, while the government only supports the efforts.