한국해운의 국제경쟁력과 선박금융제도

Abstract

A Study on Causes and Effects between Competitive Edge of the Shipping Industry and Ship Financing System in Korea

Shipping business belongs to an international and capital-intensive industry and thus shipowners are keen on improving competitiveness over cost factors such as, but not limited to, capital cost, voyage cost, general overhead cost, and so on for its survival, further growth and development in the world shipping market. Shipping cost can be generally classified into two categories, i.e., international and national costs. The costs which may be considered as non-variable between nations can be regarded as international whereas those which may be variable between nations as national.

The capital cost, which has been national one to Korean shipowners, has not been competitive over foreign competitors in the international shipping market over the last five decades because the terms and conditions of ship financing employed by Korean shipowners have not been favourable and the Korean rules and regulations on foreign currency exchange control, taxes, custom duties and depreciation, among others, have been relatively unfavourable for Korean shipowners. This means that their capital and general overhead costs have been comparatively higher than those of foreign shipowners. However, the voyage cost of Korean ship has been similar to foreign shipowners'.

The world shipping market becomes more unfavourable to Korean shipowners because the government policy for protecting them, such as cargo preference and waiver system, has been repealed since Korea joined in WTO and OECD. Furthermore, the international rules and regulations against protective measures and policies have been strengthened and severer than before, and any breach of them will be followed with retaliation and conflicts.

In the meantime, Korean shipowners have recently been strongly required by the Korean government to improve financial situation and to reduce their equity-debt ratio to below 200 percent by the end of 1999. Under such international and domestic circumstances, they have to find out suitable way of ship financing arrangement with better and more favourable terms and conditions to fulfill competitive services.

This study aims to find out the reason why Korean shipowners were in uncompetitive position in the world shipping market during last half century from 1945 to 1997 by historically investigating ship financing sources, Korean rules and regulations related to ship financing and its terms and conditions.

The whole period (1945-1997) considered under the study is divided into five sub-periods for historical review as follows:

- Period of reliance on government provision of ship financing

(1945-1961).

- Period for diversification of ship financing sources(1962-1975).

- Period of expansion of ship financing(1976-1983).

- Period of adjustment of ship financing(1984-1990).

- Period of open ship financing(1991-1997).

The following typical financing sources and Korean owners' ship financing arrangement were reviewed: -

- Bank loans: official export credit, Keihek-Zoseon and general

commercial bank loan.

- Lease financing

- Equity financing

- Special type of ship financing such as K/S ship financing, Shikumisen and mezzanine financing scheme.

Having researched into Korean shipowners' ship financing sources and their availability through historical review of them in this study, five hypotheses are set up to test whether the Korean shipping industry had competitive edge in the world shipping market from 1945 to 1977.

[Hypothesis No. 1] It was one of reasons why some Korean shipowners, especially in the period of expansion of ship financing(1976-1983), were in a bankrupt situation where they failed to generate net cash flow from operating the vessel secured with foreign ship financing.

It was found out that Korean shipowners could not generate net cash flow from even long-term COA and could be presumed same from their general shipping activities, which enable us to assume that Korean shipowners would be in a financial difficulty and eventual bankruptcy. Thus the hypothesis No. 1 has been adopted.

[Hypothesis No. 2] Korean shipowners were not in competitive position on capital cost which was higher than those of foreign competitors' because both the terms and conditions of ship financing were not favorable, and rules and regulations were so much restrictive.

It was confirmed from the study that Korean shipowners were hampered from ship financing contract on a commercial basis due to various government's restrictive rules and regulations. In addition, they failed to contract ship financing with favourable terms and condition. It was further confirmed that Korean shipowners were not in a competitive on capital cost factors due to both reasons above, which make us support on hypothesis No. 2.

[Hypothesis No. 3] Notwithstanding to above, it was possible for Korean shipowners to build up specialized fleet such as iron ore or coal and liquefied natural gas carriers with continuous employment of long-term COA basis, owing to the cargo preference policy and waiver system introduced by the Korean government.

It was confirmed that the government gave first priority to Korean shipping companies to have long-term COA with POSCO, KEPCO, KGC, which enables them to fix the new building order with Keihek-Zoseon or BBHP.

Thus the domestic shipping enterprises were in a competitive for carrying these charterers' cargoes. Thus we can adopt hypothesis No. 3.

[Hypothesis No. 4] The Korean shipowners have not taken a proper measure in order to be competitive under the circumstances that both the rules and regulations related to environmental protection and imposing penalty on breach of them have been strengthened and severer than before under the circumstances of open economic orders.

It was found out that the Korean shipowners failed to meet this kind of requirement for ship financing to be competitive in world shipping market. The hypothesis No. 4, thus, could be supported.

[Hypothesis No. 5] It has been greatly contributed to improving Korean shipowners' competitiveness on capital cost factors in the shipping market that Korean government is revising restrictive rules and regulations and is lifting the ban on ship financing and furthermore the big charterers' are improving terms and conditions on COA freight level to Korean shipowners.

It would be assumed that the recent change and improvement on shipping policy from the government and big charterers such as POSCO, KEPCO and KGC would be greatly helpful for up-grading Korean shipowners' competitiveness considering the reverse action from government and big charterers caused reverse effects in the past. Hypothesis No. 5, therefore, would be adopted.

And the study recommends the following:

First, the restrictive rules and regulations relating to ship financing should be further amended in order for Korean shipowners to be allowed for commercial approach and decision in shipping activity.

Second, the shipowners themselves should prepare and take proper measures for contracting ship financing arrangement with better and favourable terms and conditions under open economic order and severer rules and regulations on maritime environmental matter

Third, the government should newly devise in law any financing scheme, which enables Korean shipowners to save their capital charges and keep eventually them competitive.