HMM rebuts skepticism about growth plans

Hyundai Merchant Marine said it has “coherent strategies” for reaching its goal of increasing its share on the container market to 5 percent by 2021.    Hyundai Merchant Marine (HMM) said it has “coherent strategies” for gaining a five percent share of the container shipping market by 2021, countering an article that appeared in industry analyst Alphaliner’s weekly newsletter, which called the goal an “unrealistic target.”   
   HMM CEO Yoo Chang-keun said during a press conference Dec. 12 that in the medium and long run, the shipping company will become specialized in the U.S. and Asia lines, based on its prior experience of comprising 5-6 percent of the global market share. Yoo also said, “To become the final winner in global competition, the company will focus on raising revenues and operating profits, and improving service quality in the next two to three years.”
   Alphaliner questioned HMM’s ambition, saying the goal would require the carrier to more than double its current capacity of 455,859 TEUs (165,080 TEUs on 22 owned ships and 290,779 TEUs on 44 chartered ships), which currently amounts to 2.2 percent of the global fleet.
   Alphaliner projects the global container fleet will grow to 22 million TEUs by 2021.
   Alphaliner said that although HMM plans to order five new containerships, that is a relatively small order and will do little to help the carrier boost its capacity.
   HMM said it would concentrate on boosting cost competitiveness by primarily focusing on the Asia-U.S. route.
   In its bulk business, HMM said it plans to concentrate on tankers rather than on dry bulk carriers. The company also noted how it is aims to focus on acquiring more terminals.
   However, HMM said it will not be engaged in “overly-active fleet expansion” and “will also be looking at ways to optimize costs through the use of fuel-saving devices and more environmentally sustainable vessels.”
   HMM said Korea Development Bank, one of its creditors, has “promised to pump just over 300 billion South Korean won (U.S. $250 million) into the company.”
   In reaction to Alphaliner’s skepticism, an HMM spokeswoman said the shipping company’s specific plan is not to be shared with the general public. “It is our medium-and long-term plan and confidential business information,” she said. “Over time, they will learn that HMM’s growth plans are specific and have appropriate strategies.”
   In regards to new containership orders, she said it was “ridiculous” to ask “HMM for disclosure in advance of estimated total number of new ship orders.”
   After Hanjin Shipping filed for bankruptcy, she said HMM “joined the bid for Hanjin’s transpacific network based on a thorough business logic, and have no regrets that Korea Line has been chosen as the preferred bidder. We suppose that we would have taken another loss, if we had been chosen as the preferred bidder with extortionate bidding price.”
   She said, “The latest controversy over Hanjin’s contingent liability issue in China proves that we made a right business choice,” adding that because of Hanjin’s contingent liability, Korea Line has asked a Seoul court to reduce the acquisition price.
   HMM has seen a dramatic increase in its transpacific market share, the spokeswoman added.
   HMM said that in November, its weekly shipping volumes on trade to the West Coast totaled 14,769 TEUs, 61 percent more than the weekly average of 5,586 TEUs a year earlier. As a result, its market share on the Asia-West Coast route rose 2.4 percentage points to 7.3 percent, and its rank increased on the route from 11th to fifth place.
   HMM said its market share on all routes to America, including the eastern and western seaboard, totaled 6.2 percent in November, up 1.5 percent year-over-year, putting it in seventh place among global players, compared to 10th place a year prior.
    “After the breakdown of Hanjin Shipping, we’ve added an extra loader and also launched a new Asia to U.S. West Coast service, which helped the company absorb Hanjin’s orders on the route and increase market share,” the company said earlier this month. “We will continue to focus on expanding our presence in the Asia-U.S. route.”
   For trade between the Far East and South America, HMM said it will “reshuffle its consortium with a number of shipping lines.”
   “Previously, HMM had a co-operative agreement with firms such as Hamburg Süd, Hapag-Lloyd, UASC, CMA CGM, NYK and COSCO, but early next year, it will work with Hamburg Süd, Hapag-Lloyd, UASC, NYK and ZIM, where they can exchange cargo capacity,” HMM said. “The new offering would include 13 boxships, with HMM deploying one 8,000-TEU vessel due to depart from Busan port on Jan. 13, 2017.
   In regards to HMM’s cooperation with the 2M Alliance, the HMM spokeswoman said the carrier’s “relationship with 2M for strategic cooperation is very stable.” In conclusion, the spokeswoman said, “We believe that a consistent pessimism for the future of cooperators who start a new relationship is getting readers or us nowhere.”