Hanjin Shipping Co. gained the most in a week in Seoul trading as concerns that the unprofitable shipping line wouldn’t be able to survive eased after the government indicated a merger with a smaller rival is possible.
Hanjin Shipping, South Korea’s biggest container shipping line, climbed 6.3 percent to close at 2,290 won, the largest gain since June 7. Hyundai Merchant Marine Co., the country’s second-biggest container shipping line, advanced 2.4 percent to 14,900 won.
South Korea is reviewing various measures including a possible merger to increase competitiveness in its shipping industry, which is struggling with mounting debt after years of losses from weak demand, the Financial Services Commission said Monday. Hanjin Shipping is among liners worldwide that are selling assets, consolidating and seeking new partnerships to stem losses as slowing trade and overcapacity depress cargo rates.
Hanjin Shipping is in talks with shipowners to reduce charter fees as part of a requirement by creditors in exchange for funds to improve its financials. Hanjin Group Chairman Cho Yang Ho met with Gerry Wang, chief executive officer of Seaspan Corp., to discuss changes to charter rates, Hanjin Shipping said in an e-mailed statement Tuesday. The South Korean company currently operates seven container ships leased from Seaspan.
Last week, Hyundai Merchant said it reached an agreement for shipowners to reduce the fees in exchange for equity in the ailing company, and expects to sign a final accord by the end of this month.
CMA CGM SA, the world’s third-biggest container shipping company, in December offered to buy Singapore’s Neptune Orient Lines Ltd. for S$3.38 billion ($2.5 billion) in the industry’s biggest acquisition since 2005.
