KOBC Launches Support for Northern Sea Route Fleet, Investing KRW 120 Billion Annually in Icebreakers and Ice-Class Vessels

[Financial News] Investment in icebreakers and ice-class vessels is set to move forward in earnest to support the commercialization of the Northern Sea Route (NSR) and encourage national-flag shipping companies to build fleets for polar operations.
Korea Ocean Business Corporation (KOBC) announced on the 17th that it will establish an “Icebreaker and Ice-Class Vessel Investment Program,” which will operate with an annual budget of KRW 120 billion.

The NSR is drawing attention as a new maritime transport route that can reduce logistics costs and sailing time because it is shorter than existing routes. However, vessels equipped with icebreaking or ice-navigation capabilities are required to operate in polar regions, making them more expensive to acquire than conventional vessels. Profitability also remains uncertain.
KOBC established the program to ease shipping companies’ initial burden of securing vessels and enable them to proactively acquire fleets needed for operations on the NSR.
The investment will target newly built or secondhand icebreaking and ice-class vessels acquired by national-flag shipping companies for NSR operations. It will support the acquisition of various types of polar-operating vessels without limiting the eligible vessel type, including container ships, bulk carriers, tankers, and car carriers.
KOBC will invest up to 30% of the vessel price through subordinated financing. Including senior financing, shipping companies will therefore be able to secure ship LTV financing of up to 90% of the vessel price. This could reduce the companies’ own funding burden for vessel acquisition to the 10% range.
Because subordinated financing carries relatively greater risk than senior financing, KOBC’s investment is also expected to help shipping companies establish a more stable financing structure for securing vessels.
A KOBC official said, “Through this investment program, we plan to support national-flag shipping companies in securing icebreakers and ice-class vessels, while strengthening their polar-operating capabilities and fleet competitiveness needed to expand NSR operations in the future.”[email protected] Byeon Ok-hwan Reporter