Dry bulk player SW Shipping plans to enter the booming container market

Donghae Port Credit POSCO

South Korean dry bulk carrier operator SW Shipping will become the newest entrant in container shipping next year, operating a shortsea service to Vietnam from South Korea.

SW CEO Kang Seong-hun signed a memorandum of understanding with the government of Gangwon Province, Donghae Port and the Donghae Regional Oceans and Fisheries Bureau to launch the service between Donghae and Ho Chi Minh-Ville next June.

And in 2023, the line intends to start a service linking Donghae to the Russian ports of Vostochny and Vanino.

Attracted by the record profits in the container segment, SW approached the Donghae regional office in March to discuss establishing a service route. Calculations show that shippers and receivers in Donghae can save 20% on domestic transportation costs if they can ship goods directly to and from Vietnam.

SW is keen to gain experience in container shipping by operating the services of shortsea for a few years before embarking on transpacific trade, perhaps in 2030.

SW achieved a net profit of $ 3.28 million in 2020 and plans to invest around $ 241 million in container transport, purchasing two used 1,000 TEU vessels to launch the service to the Vietnam at the top of its shopping list.

With the support of the state-controlled ship finance provider, Korea Ocean Business Corp, SW also plans to acquire 4,000 containers, either through purchases or long-term rentals and aims to attract cargoes from Gangwon and the Seoul metropolitan area, which account for 70% of the 600,000 teu of goods exported from South Korea to Vietnam.

Peter Sand, chief analyst at Xeneta, a freight analysis consultant, said The charging star new entrants faced several challenges.

“The most important thing is to be able to really provide the service, that is to say operational excellence. This mainly means having the right agreements with ports and terminals, preferably with little congestion.

“Buying a vessel in the current market, with asset prices at an all time high, means that operators also need to be very confident that vessels can be used, as they have to be careful with their loan clauses. value. This can be done with the support of a few strong and stable clients, who will provide much needed volume to secure some cash flow.

“.

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