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Seoul wants carriers to codeshare on SE Asian services

South Korea's Ministry of Oceans and Fisheries (MOF) is getting the country's liner operators to further streamline their Southeast Asian services by joining what has been termed the K-Alliance, that would operate services through a code-sharing arrangement.

Applications to join the K-Alliance opened early this month and will close on 11 December.

MOF said, “We’re encouraging efficient vessel deployment by getting South Korean carriers to co-operate on Southeast Asian routes.”

It is not the first time that the government has sought to cool what it sees as an overheated local container shipping industry.

In 2017, the MOF engineered the formation of the Korea Shipping Partnership, a quasi-alliance of all 14 of South Korea’s liner operators. However, this attempt is widely viewed as unsuccessful, as the liner operators lack the determination to avoid service duplications.

Through the K-Alliance, the government hopes to resolve excessive competition through optimising the companies’ fleets and service routes. Cost competitiveness can be enhanced by reducing duplicated services and sharing vessels, while the state-backed financial institution, Korea Ocean Business Corporation (KOBC), will provide funding and essential operating assets.

Proposing K-Alliance is part of a cross-ministerial support system to address the ongoing surge in container freight rates, especially on the Transpacific.

MOF is working with the Ministry of Trade, Industry and Energy, the Ministry of SMEs and Startups, the Korea International Trade Association, the Korea Shipowners Association, the Korea Trade-Investment Promotion Agency (KOTRA) and the Korea SMEs and Startups Agency.

These ministries and agencies have formed a joint export and import logistics response at the World Trade Center in Seoul.

In response to the acute container shortage that is also driving up freight costs, KOBC has ventured into container leasing, building large quantities of containers and signing long-term container rentals with local liner operators at reasonable rates.

Martina Li
Asia Correspondent

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