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| A Hyundai Merchant Marine container carrier enters the port of Rotterdam, Holland. / Korea Times file |
By Jhoo Dong-chan
Debt-ridden Hyundai Merchant Marine (HMM) seems fully geared up for a smooth return as the company said it expects to soon join the 2M container alliance, a key condition set by its creditors for debt rescheduling and its rehabilitation program.
A number of overseas industry watchers are, however, raising doubts about the real reasons behind the nation's second-largest shipping firm's bid to join the world's largest shipping alliance.
The U.K.-based marine transport research agency Drewry alleged in its newsletter last month that the Korean government may have pulled the strings in membership talks between HMM and the shipping container operators of the 2M alliance, Maersk Line and MSC, the largest two of the world.
"The Korean government, concerned for its ailing shipping and shipbuilding industries, may have called upon the 2M carriers to ride in and rescue HMM in return for favors," it said.
"Both Maersk and MSC already have extensive liner service networks in Korea. HMM's services would not appear to add anything to the 2M alliance, other than a bit more scale. Why would savvy carriers such as Maersk and MSC allow themselves to be used as a part of the conditions set by the ailing shipping company's creditors for the restructuring program?"
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Drewry concluded that these three carriers, HMM, Maersk and MSC, are not obvious partners in terms of culture, size or trade mix, which hints at a hidden story behind the recent membership talks.
A number of industry insiders at home and abroad, thus, consider it may be advanced work for a possible acquisition of HMM by Maersk Line. Maersk Line management board member Jakob Stausholm partially admitted the allegations in an interview with Reuters.
"We are defending our leadership position. If we are strong, there is no reason for us not to grow," he said.
"If you look at the history of Maersk Line, we have achieved our leadership position by the combination of organic growth and acquisitions. If the right opportunity is there we will look into it."
According to the Reuters report, Maersk has not made any major acquisitions in over a decade but says it might be open to "the right opportunity," although doubters believe such deals risk accumulating ships without securing enough customers.
The Korean government, however, immediately denied the allegations.
"It is just groundless," Ocean and Fishery Minister Kim Young-suk said.
"The government wouldn't have struggled this much for restructuring if we wanted to sell HMM abroad. I believe Maersk and MSC expect HMM to play a role under the 2M alliance structure in the Asia-America route."
Drewry, however, rebutted that HMM's shipping capacity is not helpful enough for the 2M alliance's operation in the global market.
"HMM is a relatively minor player in the East-West trades with about 11 ships deployed on the Asia-Europe and Asia-North America trade routes, able to only swell the 2M's share of nominal capacity on the two trade routes by about 2 percent. It suggests that Maersk, the leading shipper in the 2M alliance, rather aims to prepare acquiring it or having a joint venture with it."
Such speculations delighted creditors of the ailing shipping company.
"It would be a huge boost to HMM debt repayments if Maersk intends to acquire it," a creditor party representative told The Korea Times.
The nation's maritime sector has been under pressure recently as shipping operators HMM and Hanjin along with three major shipbuilders, Daewoo Shipbuilding & Marine Engineering (DSME), Hyundai Heavy Industries (HHI) and Samsung Heavy Industries (SHI), are undergoing restructuring due to a downturn in the shipping and shipbuilding industries.
According to data released by the nation's ship owners' association, if the two shipping carriers fold, the consequences would include the loss of 5,400 jobs and damage to the country's economy worth a total of $19.13 billion.
The government has thus stepped in with a number of measures including a billion dollar fund to help the two carriers' creditors ― headed by the state-run Korea Development Bank ― withstand the losses.
The government outlined conditions that HMM should fulfill if it wants to be included in the rescue plan, one of which is joining a shipping alliance.
HMM was previously talking with THE Alliance, the world's third-largest shipping alliance, for possible membership, but things did not move forward because Hanjin, which already has a seat at the alliance, allegedly opposed HMM joining. A Hanjin official denied the allegations.
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