The Korea Shipowners¡¯ Association (KSA) has pleaded for more to be done to assist Hanjin Shipping and Hyundai Merchant Marine (HMM) as the country¡¯s two biggest shipping companies continue to struggle with cashflow.

In a letter jointly addressed to the National Assembly, Korea Development Bank, the Ministry of Strategy and Finance, the Financial Services Commission, and the Ministry of Oceans and Fisheries, the KSA requests financial assistance for HMM and Hanjin as soon as possible.

Requesting that the government devise appropriate policies to improve the companies¡¯ liquidity, the association said, ¡°Today, South Korea¡¯s global container shipping companies are faced with worsening market conditions caused by prolonged recession.¡±

Despite desperate measures undertaken by Hanjin and HMM, including raising over KRW5 trillion from selling their profitable LNG shipping units and dedicated bulk businesses, they remain short of cash.

The association said that the companies are faced with substantial debts and interest payments, as well as bonds that are due to be repaid.

As of 30 September 2015, Hanjin and HMM have long-term debt of KRW3.12 trillion (USD2.66 billion) and KRW2.8 trillion respectively.

Hanjin¡¯s current assets total KRW1.27 trillion while current liabilities total KRW4.1 trillion, indicating a working capital deficit of KRW2.83 trillion.

HMM's current assets stand at KRW1.19 trillion while current liabilities stand at KRW3.44 trillion, giving a working capital deficit of KRW2.25 trillion.

The government has provided financial support through the introduction of convertible bonds, but more funding is needed, the KSA maintain. Korea Asset Management Co Ltd, which has provided ship financing to small and medium enterprises via sale and leaseback arrangements, has limited resources to assist larger companies.

The KSA urged the government to do more, pointing out that the governments of China, Denmark, France, and Singapore recognise the strategic importance of their national shipping lines. The association noted that the four countries have been supporting their national lines¡¯ viability and competitiveness throughout the shipping downturn.

The association said, ¡°With the imminent maturing of corporate bonds, 2016 and 2017 will be difficult years for Hanjin and HMM if refinancing support is halted. It is more urgent than ever for the government and ... lenders to actively support the two companies, which transport more than 99% of South Korea¡¯s exports and imports, to overcome their liquidity crises and preserve their global competitiveness.¡±