Some major South Korean corporations are seeking to venture into the shipping business, sparking opposition from the shipping sector.
According to industry sources on June. 12., LOTTE Global Logistics is set to launch an eco-friendly marine transport business by introducing two ammonia-powered vessels. Previously, on May 25, 2021, LOTTE Global Logistics formed a consortium and signed a memorandum of understanding (MoU) for the marine transport and bunkering of green ammonia with LOTTE Fine Chemical, POSCO, HD Korea Shipbuilding & Offshore Engineering (HD KSOE), and the Korean Register (KR).
LOTTE Fine Chemical, Asia’s largest and the world’s third-largest ammonia distributor, imports, stores, and supplies approximately 900,000 tonnes of ammonia annually. Last year, its ammonia division’s sales reached 492.8 billion won ($358.03 million), capturing about 70% of the domestic ammonia distribution market. A representative from LOTTE Global Logistics stated, “We are still in the stage of designing each company’s roles within the consortium,” adding, “We have completed a review confirming that there are no legal issues with registering for the maritime outbound freight transportation business with the Ministry of Oceans and Fisheries.”
Hanwha Group is also positioning itself to enter the shipping industry. In April of this year, Hanwha Ocean established a shipping company named “Hanwha Shipping LLC” under its U.S. subsidiary. Hanwha Ocean explained, “Hanwha Shipping LLC is intended to demonstrate our eco-friendly and digital technologies for ships,” adding, “We are in the process of concretizing the business.”
Industry analysts speculate that Hanwha Group may venture into eco-friendly fuel transportation through this new shipping entity. Hanwha Group is actively engaged in green energy projects, such as exploring the establishment of a low-carbon ammonia facility in the U.S. with an annual production capacity exceeding one million tons.
However, the shipping industry is taking steps to counter the entry of large corporations into the green fuel transportation sector. According to Article 13 of the Enforcement Decree of the Marine Transportation Act, corporate entities with a 40% or greater share of shippers with bulk freight are prohibited from entering the shipping industry. Nonetheless, eco-friendly fuels such as methanol, ammonia, and hydrogen are not classified as bulk cargo, thus permitting large corporations to enter the green fuel transportation business.
The shipping industry has petitioned the Ministry of Oceans and Fisheries to classify those fuels as bulk cargo. An industry representative stated, “If large corporations start maritime transportation leveraging their vast capital and market dominance, existing shipping companies could be marginalized.”
