Money is leaking from the coffers of South Korea's two largest shipping groups, Hanjin Shipping and Hyundai Merchant Marine.

In the first three months of the year, the two carriers reported massive operating deficits and both are fighting a grueling battle for the survival of their businesses, report several local media, including as Maeil Korea.

Hanjing Shipping delivered a loss of 116 billion won against a profit of 115 billion won in the same period last year. On the bottom line, the carrier lost 261.1 billion won. This is a sharp contrast with the first quarter of 2015, where the profit sat at 22.9 billion won.

Things are looking even worse at rival Hyundai Merchant Marine (HMM).

From the beginning of the year and up until the end of March, the carrier suffered a negative operating result of 163 billion won against a profit of 4.2 billion won in the same period of 2015. The bottom line loss grew to 276 billion won compared to a loss of 44.5 billion won in the first quarter of 2015.

Hanjin Shipping gets three months to settle its future 

Both Hanjin and HMM are in the middle of negotiations with their creditors to restructure debt and ensure sufficient cash to continue operations.

According to Maeil Korea, the agreements are contingent on whether the carriers manage to renegotiate prices on their chartered vessels, which may prove to be a difficult task.

Last week, Hanjin Shipping received a resounding no to its request for reduced charter rates on the vessels which the carrier has chartered from Seaspan. At least, Hanjin could take some solace in the fact that it has entered the new container alliance, The Alliance, which counts six members and is headed by German Hapag-Lloyd.

This was not the case for HMM, which was left out in the cold. The carrier expects that it will join the alliance when it has landed an agreement with its creditors. If HMM does not enter into the new alliance, the carrier could be forced to submit to acquisition or downscale its business. A merger with Hanjin could also be on the cards.

Read more about Hyundai Merchant Marine (HMM)

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