Government backs construction of 3 coastal vessels to modernize aging fleet

The government is stepping up support for new vessel construction to address the aging of coastal passenger and cargo ships, selecting three shipping companies under this year's second round of its coastal vessel modernization fund and committing to cover half the cost of each vessel.

The Ministry of Oceans and Fisheries announced Monday it had chosen Seyang Shipping, Taekyung Tanker and Dokdo Cruise as the three beneficiaries under the second round of this year's Coastal Vessel Modernization Fund.

The modernization fund was established in 2016 to support the replacement of aging coastal vessels. It has since grown to 249 billion won ($176 million) in total and, including the latest round, now supports the construction of 14 vessels. Six coastal passenger ships built under the program — among them the Queen Mary (Mokpo–Jeju) and the Hanil Gold Stella (Wando–Jeju) — have already been completed and are in service.

Eligibility was originally limited to coastal passenger vessels but expanded in 2024 to include coastal cargo ships, a move aimed at ensuring equitable treatment between the passenger and cargo shipping sectors.

Each of the three selected companies will receive fund support covering 50 percent of the vessel price. The shipping companies will bear the remaining construction costs and repay the fund over 15 years — with a three-year grace period followed by 12 years of installment payments — through vessel operating revenue, after which ownership transfers to them.

Seyang Shipping and Taekyung Tanker will jointly order vessels of the same specifications from the same shipyard. The ministry expects the arrangement to reduce per-company costs and improve construction efficiency by allowing the two firms to share design and other building expenses.

The ministry plans to hold a third round of applications in August or September for companies that wish to participate in the modernization project but missed the current round. It will also offer tailored consulting for individual shipping companies to broaden participation.

"Modernizing coastal vessels is an important policy for guaranteeing maritime transport rights for island residents and strengthening the competitiveness of coastal logistics," said Kim Hye-jeong, director general of the ministry's maritime and logistics bureau. "We will put in place a range of support measures — including promoting joint orders and providing customized consulting — so that more shipping companies can take part in the project."