Shipping affected by diplomatic crisis between South Korea and Japan

The tense relationship between two of the major Asian economies has been additionally worsened following South Korea’s move to ban foreign shipping companies from billion-dollar contracts with state-run companies for the transportation of e.g. coal.

Photo: Jyllands-Posten

For the first time ever, the South Korean Government is looking to ban foreign shipping companies from entering into contracts with the country’s state-run energy industry in order to cater for Korean shipping companies such as Hanjin Shipping, Hyundai Merchant Marine and STX Pan Ocean. The ban is expected to worsen the already tense diplomatic relations with Japan, whose shipping companies moved 25 percent of the South Korean coal in 2011, Bloomberg reports.

On 21 December 2012, state-run Korea Electric Power Corp called for tenders to contracts worth a total of USD 2 billion. The call included a clause that any bidders must enter into a partnership with a South Korean company and furthermore build nine ships at one of the country's ship yards.

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