Taiwan's Struggling Container Sector to Receive $1.9 Billion in Government Support

Taiwan has approved $1.9 billion in support for the country's struggling container shipping sector.

The Government of Taiwan Tuesday announced that it has approved $1.9 billion in funding to provide support to the country's struggling container shipping sector, The Wall Street Journal reports.

The package is said by sources to include a credit line that will provide preferred interest rates for the country's container carriers, specifically, Evergreen Marine Corporation (Evergreen) and Yang Ming Marine Transport Corporation (Yang Ming).

The credit line is anticipated to receive approval by the country's cabinet by the end of November, said a source, noting that through the new package, Evergreen and Yang Ming will be given access to loans with annual interest rates of about 2.9 percent.

Sources are also reported to have said that Evergreen and Yang Ming have explored a possible merger, but it was concluded that such a tie up would be complicated by the two companies' memberships in competing global shipping alliances.

Basil Karatzas, of Karatzas Marine Advisors & Co. called such interest rates a "huge discount" considering the amount of current risk, noting that most loans given to shipowners can be expected to have attached interest rates of 6 percent to 7 percent.

"The nation relies on shipping firms to transport goods that come in large quantities, which is key to our economic development," Taiwan’s Deputy Minister of Transportation, Wang Kwo-tsai was quoted as saying, adding that the recent collapse of Hanjin Shipping Co. Ltd. (Hanjin) "shows us that the government has to provide support to the industry before the damage becomes uncontrollable."

As Ship & Bunker reported earlier this week, Adrian Tolson, Senior Partner at 20|20 Marine Energy, has warned that continued consolidation within the container shipping markets is setting the tone for a tough 2017 in the bunker markets.