Economic valuation of a national shipping company using a contingent valuation method (CVM): The case of Korea

Abstract

Due to the bankruptcy of Hanjin Shipping, which was the seventh-largest container liner, Korea's liner shipping network had collapsed. When Hanjin Shipping entered legal management, shipping and port logisticians, mainly located in Busan in Korea, spoke consistently about the risk of its bankruptcy and damage. Their argument was that if Hanjin Shipping entered bankruptcy, consumer prices would move sharply higher due to domestic cargo being transported by foreign shipping companies. However, after the bankruptcy of Hanjin Shipping, there was no news that consumer prices in the Republic of Korea jumped. Regarding this point, most people not related to the shipping industry may think that the impact of the loss of Hanjin Shipping is not very different from the argument by shipping experts. Considering the above discussion, this paper raises the following questions. How much most people consider the shipping industry or shipping company to be important? To answer this research question, this paper estimates the economic value of a national shipping company by employing the contingent valuation method (CVM). As a result of the study, willingness to pay (WTP) for the national shipping liner's bankruptcy was estimated to be 5007.99 Korean Won (KRW) (USD 4.34) per year, and the economic value of a national shipping company is KRW 104.623.66 million (USD 90.9 million) per year.