The problems with Hanjin are not the only issues facing the shipping industry in South Korea. This once prosperous and booming country is suffering from political instability and a huge decline in one of its most important industries – shipbuilding.

Thousands of jobs are being lost at the major shipyards in an effort to survive amid a drastic drop in orders. The future looks very grim for some of these debt ridden companies unless there is a sharp upturn in global trade which looks unlikely in the medium term.

The world’s top shipbuilder in terms of number of ships constructed is Hyundai Heavy Industries and they have made 2,600 employees redundant, which represents 10 percent of its workforce.

The situation is the same with Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries, the other big two companies in South Korea. Daewoo are reporting that their workforce has been cut by 15 percent, which means that over 1,500 jobs have been lost. Samsung has also lost 1,500 jobs.

These top three South Korean shipbuilders lost a total of $7 billion last year.

Many of the problems stem from a drop in ship orders. Clarksons, the industry experts, reported 52 orders so far this year, compared with 263 in the same period last year and 1,157 orders during a peak in 1997. The drop in the price of crude oil has had a contributory effect on the yards with a slowdown in the requirement of drilling ships, oil rigs and other vessels associated with the offshore oil industry.

The South Korean banks have injected $10 billion into the shipbuilding industry and the shipbuilders have launched a self rescue plan which will inevitably lead to more job losses. This may provide medium term relief but the long term outlook is far from rosy. There is so much overcapacity at the moment and labour costs have increased considerably over the past few years.

The overcapacity of the container ship market is well illustrated in the news that beleaguered Rickmers Maritime have sold a seven year old container ship for scrapping. The 2009 built 40,542gt and 4,250 TEU India Rickmers has become the youngest vessel to be sold for breaking.

This is a reflection of the difficult economic times in which we are experiencing at present.