S. Korea`s shipping industry gets boost in Q2

South Korea`s shipping industry is expecting an improved performance, buoyed by growing container traffic in the American and European routes. Domestic shipping companies are projected to swing to a surplus in the second quarter (Q2) of this year after having suffered a massive deficit which is caused by the global economic downturn, surging oil prices and falling shipping charges. Korea-based major shipper Hanjin Shipping expects its second quarterly operating profit (OP) to be in the range of 30 billion won ($26 million) to 80 billion won, according to sources in the shipping industry and securities market. The company has experienced hardship with deficits of 492.6 billion won last year and 218.4 billion won in Q1 this year. Hyundai Merchant Marine, which suffered a 200.8 billion won OP loss in Q1 this year, is also expecting to be in the black as early as Q2 or as late as Q3. SK Shipping, which marks the 30th anniversary of its establishment this year, is projected to remain in surplus in Q2 with the surplus of 11 billion won in Q1. Such brisk performance by major domestic shippers is mainly attributed to four rounds of shipping charge hikes and falling oil prices in recent months. Both Hanjin Shipping and Hyundai Merchant Marine raised shipping rates twice for March and April, totaling four rounds of the rate hikes. A growing traffic of containers in Q2 also resulted in a rate increase. "Hanjin Shipping is expected to turn around to post 88 billion won in OP on a consolidated basis compared to the previous quarter" an analyst noted. "Its OP is also forecast to jump to 280 billion won in Q3 this year." Compared to the container shipping business which turned for the better, the bulk shipping business lags behind. "Market conditions for the bulk shipping business still remained at its lowest," another analyst said. "Performance of the bulk shipping business is unlikely to get better as Q3 is a traditionally off-season for the industry."