Increased government intervention to provide financial support to struggling carriers could ultimately delay a much-needed restructuring of the container shipping sector, according to Alphaliner.

State aid might well prolong the industry’s recovery process, as shipping continues to grapple with the problem of vessel overcapacity.

Last week, the government of Taiwan approved a TWD 60 billion (USD 1.9 billion) funding package with preferential interest rates for Taiwanese shipping companies and it agreed to grant carriers reductions in various port dues. Yang Ming and Evergreen expected to be the main beneficiaries of these decisions. The move is part of a wider economic revitalisation plan, which also includes up to TWD 500 billion (USD 15.7 billion) in loans that are to be provided by local financial institutions.

The Taiwanese initiative follows the South Korean government’s plan to establish a state-backed ship financing vehicle with an initial capital of KRW 1 trillion (USD 871 million). Aiming to improve the financial health of Korean shipping companies, the new government outlet will in total provide financing of KRW 6.5 trillion (USD 5.7 billion) to allow the country’s shipping firms to acquire new vessels.

“The large amounts of financial aid which state-related entities in Taiwan and South Korea provided to protect the nations’ ailing shipping lines, come amid a slump in earnings, while shippers have been spooked by Hanjin Shipping’s bankruptcy,” Alphaliner said.

Further to Taiwan and Korea, the Chinese government has long provided various forms of support to its state-owned carriers. Between 2009 and 2015, China’s two largest carriers, COSCO and China Shipping, received government subsidies that amounted to some CNY 10.9 billion (USD 1.74 billion).