The change will happen around the same time that HMM starts taking delivery of the first a dozen 23,000-TEU containerships.
Hyundai Merchant Marine (HMM) said Monday that it will become the fourth member of THE Alliance vessel-sharing agreement starting April 1, joining Hapag-Lloyd, Yang Ming and Ocean Network Express.
Members of the THE Alliance also have decided to renew their cooperation and to extend the duration of the partnership for 10 years — until 2030.
Currently, HMM shares space with the 2M alliance of Maersk and Mediterranean Shipping Co. but is not a full member of 2M. Instead, it has what HMM has called “an agreement of strategic cooperation.”
Jae-hoon Bae, who was named president and chief executive officer of HMM in March, had traveled in April to Denmark and Switzerland, where Maersk and MSC are headquartered, in what HMM had said was an effort “to consolidate the relationship with 2M.”
Instead, next year HMM will join THE Alliance.
Bae said, “Being a full member of THE Alliance gives us a lot of pride. We are convinced that we will be successful and generate additional value for our customers, employees and shareholders with combined experience, strategic skills, competitive fleet and strong focus on our clients’ needs.”
Rolf Habben Jansen, CEO of Hapag-Lloyd, said, “HMM is a great fit for THE Alliance as they will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient — and it will help us also to further reduce our emissions.”
HMM has ordered 12 23,000-TEU containerships, which will be delivered in the second quarter of 2020. Additionally, it has eight 15,000- TEU ships on order that will join HMM’s fleet in the second quarter of 2021.
HMM said the 23,000-TEU ships will be deployed in the Far East-North Europe trade and will further strengthen THE Alliance’s service portfolio.
“THE Alliance was always the most likely candidate for HMM,” said Simon Heaney, senior manager of container research at Drewry. “2M appears to have moved on, judging by its partnership with ZIM in the transpacific.”
Earlier this year ZIM and 2M announced they were expanding their cooperation. They now share space on services between Asia and ports in the Pacific Northwest (both U.S. and Canadian), U.S. East Coast and Mediterranean.
THE Alliance was “a bit short (relative to the other alliances) on the active and newbuild ships front, which HMM helps plug,” added Heaney.
“We’ll probably never find out, but I wonder if any conditions were placed on HMM’s entry. Its ambitious growth plans to double its fleet in a short window are incompatible with market stability and HMM might have been forced to temper its plans at the request of the other THE Alliance members. Otherwise, THE Alliance are risking giving a leg up to a potentially rogue force that they could have let wither on the outside as HMM would have found it very challenging to compete in the east-west trades as an independent,” he said.
Heaney said he did not think there will be any other alliance movement in the short term.
Lars Jensen, the chief executive officer of SeaIntelligence Consulting, wrote on LinkedIn, “This is a strengthening of THE Alliance’s opportunities to develop their network as it will bring in a series of ultra-large vessels, a vessel type where it could be argued that THE Alliance was underexposed compared to 2M and Ocean Alliance. It will also provide Hapag-Lloyd, ONE and Yang Ming with growth opportunities without having to leverage themselves into a large new orderbook in the short term.”
Recently The Wall Street Journal reported sources had told it that Yang Ming, Hapag-Lloyd, Yang Ming and COSCO are all considering ordering large containerships.
Jensen said that with the addition of HMM, THE Alliance will, if it wants, be able to increase its number of transpacific strings from 16 to 19, matching the 19 offered by the Ocean Alliance.
“At the same time this presents 2M with a significant network challenge on the transpacific. Presently 2M together with ZIM and HMM operate some 14 services combined. However, the withdrawal of HMM will also remove the three services operated by HMM, leaving only 11 services against the two other alliances’ 19 potential services,” Jensen added.
Jeremy Nixon, CEO of ONE, said, “We are very happy to see HMM join THE Alliance as their membership will allow us to offer enhanced services to our customers due to a wider port coverage, expansion of our product offerings, more sailing frequencies and a better balance of our cargo flows.”
Added Bronson Hsieh, chairman and CEO of Yang Ming, “HMM joining THE Alliance is an important milestone for THE Alliance as it will help us to provide a broader service network to the customers and facilitate the advance of the development of THE Alliance starting from next year.”