The government is reportedly pushing for a merger between Hyundai Merchant Marine, the top in the shipping industry, and SM Line, the second. The government, which expected SM Line to face a managerial crisis due to the worsening shipping industry, seems to have decided that the integration would be a solution.
However, not only SM Line and Hyundai Merchant Marine but also KDB Bank, Hyundai Merchant Marine's major shareholder, showed negative opinions. As a result, the integration process is now facing a stumbling block.
The Ministry of Oceans and Fisheries, which is in charge of promoting the shipping industry, has stepped up as an intermediary in the process of integrating Hyundai Merchant Marine and SM Line. As global competition in the shipping industry is becoming stiff to expand cargo capacity (shipbuilding capacity), the ministry believes that mid-sized shipping companies may face a crisis in management.
However, Hyundai Merchant Marine and SM Line have not reached a compromise even before the two companies sit at the negotiating table. Hyundai Merchant Marine's management situation has worsened to the extent that it can solve its capital impairment completely with government support this year. The financial situation has not improved enough to take over another company.
Even if it takes over, it is only interested in Hanjin Shipping's business network management software and integration of some of its key employees. SM Line also secured related assets by acquiring Hanjin Shipping in 2016.
SM Line also reportedly responded that it is not happy about the ministry's plan, as Hyundai Merchant Marine never showed any intention to take over.
Meanwhile, Heo Jeong, an economics professor at Sogang University, said, "Norway, Finland, and Japan are preparing for the shipping industry during the fourth industrial revolution, including rapid investment in smart ships and self-driving ships. It is more urgent for the government to open a way for improving high-value technologies rather than forcing them to expand."