Taiwan has approved a US$1.9 billion relief package for the loss-making container shipping industry to prevent a collapse.
The package involves a credit line with preferential interest rates mainly to help Evergreen Marine Corp. and Yang Ming Marine Transport Corp., two of the world’s biggest container operators, the Wall Street Journal reports.
It is intended to avert a collapse similar to South Korea’s Hanjin Shipping Co.
“The nation relies on shipping firms to transport goods that come in large quantities, which is key to our economic development,” said Wang Kwo-tsai, Taiwan’s deputy minister of transportation.
The fallout from Hanjin’s August bankruptcy caused chaos in global supply chains, with US$14 billion worth of goods stranded at sea for months, he said.
The Hanjin situation “shows us that the government has to provide support to the industry before the damage becomes uncontrollable.”
Container ships move 98 percent of the world’s manufactured goods, from iPhones and toys to designer dresses and heavy machinery.
But the industry is battling its worst downturn in 30 years as slowing global trade and a glut of shipping capacity have pushed freight rates to levels that barely cover fuel costs.
Evergreen and Yang Ming, which move the vast majority of Taiwan’s exports, have posted a combined loss of more than US$580 million in the first three quarters of this year.
Sources said Evergreen and Yang Ming explored a merger but found that it would be complicated given that they are members of competing global shipping alliances.
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