Hyundai Merchant Marine Joins Shipping Alliance, Securing More Ocean Trade
Financially troubled South Korean carrier finds a vital partner ahead of deploying megaships
Hyundai Merchant Marine last year ordered the order of 20 megaships. PHOTO: SEONGJOON CHO/BLOOMBERG NEWS
Hyundai Merchant Marine Co. is joining THE Alliance, a cooperating group of major container shipping lines that will give the South Korean flag carrier access to significant new business as it seeks to gain financial stability.
The move to join the group—made up of Germany’s Hapag-Lloyd AG , Japan’s Ocean Network Express and Taiwan’s Yang Ming Marine Transport Corp. —came after the rival 2M Alliance refused to make HMM a full member when its associate status ends in April next year.
Being part of an alliance will help HMM cut costs by sharing ships, cargo volumes and port calls with its partners.
Newsletter Sign-up
Jae-hoon Bae, who became HMM’s president and chief executive in March, is under pressure by the carrier’s creditors to make it profitable after an accumulated $1.6 billion in losses over the past 3½ years.
The Korean carrier, which holds 1.8% of the global shipping market, according to research group Alphaliner, has relied heavily on government support to stay afloat. HMM narrowly escaped default in 2017 thanks to a $660 million state bailout and received a further $5 billion last year to finance the order of 20 megaships and port assets to boost its capacity and compete with bigger rivals.
The Korea Development Bank, HMM’s biggest creditor and its main angel in keeping the operation running, insisted the company join a world-wide shipping alliance as a condition of its support.
The Journal reported in April that the 2M partners— A.P. Moller-Maersk A/S and Mediterranean Shipping Co.—were eager to end the relationship after HMM ordered 20 megaship container vessels for $2.8 billion, adding a big surge in capacity for an already crowded Asia-Europe trade lanes.
“Joining THE Alliance will boost the group’s trans-Pacific capacity and give HMM some breathing space,” said Lars Jensen, chief executive of Copenhagen-based SeaIntelligence Consulting. “It’s a vital anchor for HMM after being kicked out by 2M.”
A third grouping called Ocean Alliance, which consists of China’s Cosco Shipping Holdings Co., France’s CMA CGM SA and Taiwan’s Evergreen Marine Corp. , has 19 weekly round-trip sailings between Asia and North America. The Alliance has 16 and 2M has 14, of which three, are provided by HMM.
HMM’s agreement with THE Alliance deal will take effect in April 2020, pending a series of regulatory approvals.
Write to Costas Paris at costas.paris@wsj.com
Comments
Post a Comment