South Korean liner operator SM Line Corporation has asked executives to take a 10% salary cut as the company suffers from falling container volumes amid the COVID-19 outbreak.
SM Line was established in 2016, after the Samra Midas Group acquired the remaining portfolio of bankrupt Hanjin Shipping. The company operates intra-Asia and trans-Pacific services, using 17 ships with combined capacity of around 74,000TEU.
COVID-19 surfaced in Wuhan, China, in December 2019, but has since spread nearly worldwide, with negative impact on consumer demand.
Container shipments to and from China have slowed. According to the Yellow Sea Liners Committee, which covers trade between South Korea and China, container volumes between both countries increased by 5% year-on-year in 2019, to over 3.17 million TEU. South Korean containerised exports to China grew by 3% to 1.1 million TEU, while containerised imports from China were up 4% to over 1.8 million TEU.
However, the Yellow Sea Liners Committee estimates that as a result of China’s prolonged Lunar New Year holidays (as a COVID-19 consequence), containerised imports from China have plunged by 70% year-on-year in the first quarter of 2020.
SM Line’s CEO, Kim Chil-bong, said that it is necessary to cut costs to tide the company over during this challenging situation.
South Korea itself has also gone on red alert as local COVID-19 infections stand at nearly 1,000, becoming the largest cluster outside China, where nearly 80,000 infections have been recorded.
Kim said that SM Line will offer up to four weeks of unpaid leave to employees who need to go for health checks or care for their children, as kindergartens and schools in certain areas have been closed.
Chil-bong said, “None of our employees have been quarantined or are suspected to have COVID-19. We’ll all work together to overcome this crisis.”