SW Shipping has become the newest kid on the container shipping block, after the company’s CEO Kang Seong-hun signed a memorandum of understanding (MOU) to launch a liner service from Donghae port.
The MOU was inked with the government of South Korea’s Gangwon province, Donghae Port and Donghae Regional Office of Oceans and Fisheries on 10 December.
SW plans to launch what will be the first service between Donghae and Vietnam, with vessels calling Ho Chi Minh City in June 2022. In 2023, SW plans to start a service linking Donghae to the Russian Far East ports of Vostochny and Vanino.
In March, SW reached out to the Donghae Regional Office of Oceans and Fisheries to discuss starting a container service, having been tempted by record-high container freight rates.
Direct shipping between Donghae and Vietnam could save shippers 20% on inland transportation costs. SW and Donghae authorities believe that the service can 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.
Initially, SW will buy two pre-owned 1,000 TEU vessels to execute the service. With help from state-backed ship finance provider Korea Ocean Business Corporation, SW plans to acquire 4,000 containers, either through purchases or long-term leases.
SW intends to be in container shipping for the long haul, and after experience in short-sea routes, envisions launching a Transpacific service in 2030.
This move marks an expansion for the company, which went into administration amid depressed dry bulk demand in 2015. After emerging from administration in 2016, SW was bought out by Dongyu Investment, with its creditor Busan Bank retaining a 1% stake.
In 2020, SW booked a net profit of US$3.28 million and the company plans to invest approximately US$241 million in container shipping.
Martina Li
Asia Correspondent
