Taiwan release multi-billion dollar rescue package for local shipping business

Taiwan ShippingThe government of Taiwan will release multi-billion dollar rescue package for the local shipping business. The Ministry of Transportation and Communications approved yesterday establishing a fund worth 17.57 billion USD, which will be used for initiatives in improvement and optimization of the shipping sector. However, the authorities do not reveal if they have any plans to merge or consolidate the business of the largest shipping operators in the country – Evergreen and Yang Ming. According to the government estimates, the shipping industry should recover within two years with return of the global economy growth.

“The nation relies on shipping firms to transport goods that come in large quantities, which is key to the nation’s economic development. We have submitted the plan to the Executive Yuan for final approval so that it can be quickly implemented to help shipping firms battle the worldwide slump in the industry”, said the Minister of Transportation and Communications, Wang Kwo-tsai. “The bankruptcy of South Korean firm Hanjin Shipping in August has caused many of its ships, as well as the goods they carried, to be detained by port authorities around the world. We see how people had to figure out ways to salvage their goods stranded at sea… The incident shows us that the government has to provide support to the industry before the damage becomes uncontrollable”, added he.

Over the past four quarters, Evergreen Marine and Yang Ming chalked up accumulated losses of 279 million USD and 527 million USD respectively, making them eligible to file for the financial assistance.

The global tonnage supply glut suppressing freight rates has eroded earnings of many shipowners and operators, on the back of uncertain demand growth in the global economy.

The shipping stocks on the local equity market moved higher during the trading session today, following the government’s announcement for the multi-billion dollar rescue package, intended to help the sector climb out of its current financial difficulties.