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From Bloomberg.com -

The South Korean government said it would provide support to those shipping lines in the country that seek mergers to bolster their market share and compete worldwide.

The government is studying various measures, including providing support for funding mechanisms that could facilitate acquisitions, the Ministry of Maritime Affairs and Fisheries said in a e-mailed statement Wednesday, without providing further details.

Hanjin Shipping is the only South Korean company among the world's 10 biggest container shipping lines. South Korea seeks to help its shipping lines grow to more than 5 percent of the global fleet by 2016, from the current 3 percent. It would like to see two more of its companies to join Hanjin Shipping among the ranks of world's biggest sea carriers.

"We are looking at ways to help develop megacarriers, because shipping lines that have the economy of size will lead the industry," the ministry said. "With high financial costs and a small market," South Korean shipping lines "are facing difficulties in growing significantly," it said.

Hanjin Shipping, the largest South Korean shipping line, ranks eighth worldwide.

South Korea is also aiming to almost triple cargo transshipment in the country's ports to 16 million 20-foot standard containers in 2016 from 5.5 million boxes last year, according to the ministry. Busan, one of the world's busiest ports, has been trying to attract more business as it faces increased competition from China.

A.P. Moeller-Maersk, based in Copenhagen, strengthened its position as the world's largest container-shipping company with the €2.3 billion, or $2.9 billion, purchase in May last year of P&O Nedlloyd, lifting its capacity by more than 40 percent. Hapag-Lloyd, based in Hanover, Germany, ranks fifth worldwide after buying CP Ships for $2 billion in August 2005, expanding capacity by 27 percent to 3.1 million containers.

South Korea has been expanding its ports and airfields as part of its efforts to become North Asia's logistics hub and one of the five biggest maritime countries in the world in the next 10 years.

India grabs Korean overflow

L****n & Toubro, the biggest Indian engineering company, will invest $400 million over the next six years in its ship-building business to grab market share as South Korean rivals are busy with record orders.

L****n will select a deep-water yard this year and aims to start building ships weighing as much as 25,000 tons in three years, according to the company chief executive, A.M. Naik. The Mumbai-based company will spend half the funds in the first three years and plans to set up a separate company to manage the business, he said.

Record order books at Hyundai Heavy Industries, the world's largest shipbuilder, and other South Korean groups could help Indian companies win more business as owners turn elsewhere to get timely delivery. ABG Shipyard and Bharati Shipyard, the two largest Indian private shipbuilders, are expanding yards aiming to win orders for smaller craft.

"There is a real opportunity for Indian companies," said Navin Thakur, a research analyst in Gurgaon, India for Drewry Shipping Consultants. "For now, they can aim for the low end of the market trying to take advantage of the overflowing Korean yards. If they do it well now, they can have aspirations like China to grow in the future."

Shipowners have spent about $207 billion in the past three years on new vessels, including container carriers and tankers, the same amount as in the preceding decade, according to Clarkson, the world's biggest ship broker.

L****n, which also builds airports and construction equipment, and this year bid with Hutchison Whampoa for a port project, has set up a team that is studying locations for the new yards, Naik said.

"Shipbuilding is our intent; we have started small," Naik said. "We'll have to put up with competition from the Koreans and Chinese."

L****n & Toubro won its first contract to build ships in May with a 4.4 billion rupee, or $95 million, order from Zadeko Ship Management of the Netherlands. These ships are being built at the company's Hazira unit, in the western state of Gujarat. Hazira does not have deep-water facilities for constructing larger craft, Naik said.

The 23 Indian shipyards, nine of which are state-owned, have a combined capacity of 110,000 dead weight tons, according to the shipping ministry, based in New Delhi. The government plans to spend 72 billion rupees to set up two yards, according to the National Maritime Development Program.
 
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