The government provides emergency financial support to domestic shipping companies to address Middle East risks.

The government has expanded unsecured credit guarantees and emergency operating capital support for domestic shipping companies facing financial pressure due to the prolonged blockade of the Strait of Hormuz and the extended Middle East conflict.

On the 28th, the Ministry of Oceans and Fisheries and the Korea Ocean Revival Corporation said they would implement a liquidity support program for Korean shipping companies that have suffered losses due to the instability in the Middle East region. The Strait of Hormuz is a core maritime passage for the transport of Middle Eastern crude oil and supplies. Because this area has been blocked, 26 Korean vessels are trapped in the strait. With delays to vessel operations piling on to the burden, shipping companies face rapidly increasing operating strain, including rising insurance premiums, higher fuel costs, and increased risk allowances for crew members.

The issue is not only that costs are rising. As freight rates increase, some cargo owners abandon loading, and the operating conditions for shipping companies deteriorate at the same time. Even if ships set sail, it is difficult to secure stable earnings, meaning concerns about a liquidity shortfall for the operating funds needed right now are growing. The government believes the impact may extend beyond individual companies and spread to the overall import and export logistics network, so it has taken preemptive support measures.

The core of this countermeasure is the introduction of a new unsecured credit guarantee system to help companies borrow funds without collateral. Introduced newly through an approval process by the Minister of Oceans and Fisheries, this system allows shipping companies to raise short-term operating funds without having to provide additional collateral separately. The support limit is up to 25 billion won per shipping company, and the guarantee applies to short-term loans of up to one year. However, if business conditions remain difficult, the term can be extended up to 5 years.

The existing emergency operating stabilization funds have also been adjusted to enable faster use at lower cost. The amount of time needed for support can be shortened by up to 3 weeks, and various fee burdens have also been reduced. The support limit of this fund is up to 30 billion won per shipping company, with a term of 1 year, extendable by 1 year. In addition, the Ministry of Oceans and Fisheries has decided to extend the principal and interest repayment period for existing financial products that have already reached maturity, and to temporarily raise the collateral recognition ratio for ship mortgage loans from the current 60%–80% to 70%–90%. Starting on the 28th, the Korea Ocean Revival Corporation will publish detailed information on its website and accept applications.

The government explained that the focus of these measures is to prevent short-term funding difficulties for shipping companies and to ease the rapid upheaval in the import and export logistics network. The shipping industry is a fundamental sector that supports energy transportation and import and export transportation, so the longer the Middle East risk continues, the more important the speed and scope of financial support become. If the Middle East situation is not eased in the future, it could lead to further financial supplementary measures or logistics stabilization responses.