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Port Report: Hyundai Merchant Marine Head Heads To Europe For Maersk And MSC sitdown

Port Report: Hyundai Merchant Marine Head Heads To Europe For Maersk And MSC sitdown


Korea's only remaining container ship line may want to go beyond its slot sharing deal, but Western carriers wary on subsidized shipping.

The new chief of South Korea's container shipping company, Hyundai Merchant Marine (HMM), is looking to get in good stead with the world's largest container shipping alliance, 2M, as his company faces questions about its survival.

Jae-hoon Bae was appointed to head Hyundai one month ago, largely at the request of the company's largest shareholder, state-owned Korea Development Bank (KDB).

The intervention by KDB comes after HMM reported a $728 million loss for 2018, its fourth money-losing year. Likewise, KDB is on the hook for $884 million in bonds it lent HMM last year.

Now on his first publicized trip abroad, Bae plans to visit the European headquarters of Maersk and Mediterranean Shipping Company (MSC) in order to "consolidate the relationship" with the 2M partners.

An HMM spokesperson was unavailable to comment further on the trip's purpose.

HMM currently only has an agreement to swap container space with Maersk and MSC on trades between the Far East and U.S., an agreement that is set to expire next April.

The container space-sharing agreement is far less than the comprehensive 2M agreement which allows Maersk and MSC to co-operate on deployment and scheduling of up 130 vessels across various trade lanes.

But HMM may be looking for some help on how it handles the big chunk of new capacity is expected to receive between 2020 and 2021.

HMM is scheduled to receive 12 container ships of 23,000 twenty-foot equivalent (TEUs) in capacity by 2020. The company is also scheduled to receive another eight container ships of 14,000 TEU capacity each.

With the new ships, HMM will about double its shipping capacity from 436,000 TEU to 824,000 TEU by 2021.

While HMM will still be a relatively small player in the global container market, the addition of more capacity to oversaturated trade lanes is not a welcome development in container shipping.

Most of 23,000 TEU capacity will likely head to the Asian-European trade lane, according to container ship analytics firm PR News Service.

That lane is already struggling under extremely poor economics with the Freightos Baltic Index for China-to-North Europe spot container shipping rates sitting at a nearly two-year low of $1,207 per forty-foot equivalent unit (FEU). The China-to-Mediterranean rate was at similar lows last sitting at $1,487 per FEU. (SONAR: FBX.CNER, FBX.CMED). Both rates remain under break-even levels for most carriers.   

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State support of ocean carriers is common across Asia, where shipping businesses aim to support export-oriented businesses or local shipyards. According to Alphaliner, China's Cosco Shipping Holdings (HKEX: 1919) received $230 million in subsidies last year.

But that support is becoming a sore point among carriers that are reeling under the low rates and do not want to see more capacity introduced to the market.

TradeWinds quoted Robbert van Trooijen, Maersk's regional manager in Asia-Pacific, as saying that when state support "would lead to the introduction of tonnage which would otherwise not have been introduced, this distorts the ability of markets to regulate themselves and achieve a healthy balance between supply and demand,"

 Maersk extends charter on 2000-built ship

Ship's owner says demand strong for high-specification post-panamax boxships (MarineLink)

Iran sanctions seen as plus for tanker trades

Oil importers will have to source product further afield now that iran's crude off market. (Seatrade Maritime)

Fuel suppliers expected to keep shipowner honest for 2020

Reprisal from local authorities to prevent fuel suppliers from selling non-compliant fuel. (Ship & Bunker)

 U.S.-China trade deal getting closer

Economic advisor says U.S. and China may have another visit to work out details. (Maritime Professional)

Image sourced from Pixabay

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Posted-In: Freight Freightwaves Hyundai LogisticsNews Global Markets General


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