By Jhoo Dong-chan
Hyundai Merchant Marine (HMM) won't be able to join the 2M Alliance, a global shipping alliance made up of the world's two largest container lines, Maersk Line and MSC, a Maersk Line official said.
This will likely deal a severe blow to HMM's efforts to normalize its management and operations, as joining a global shipping alliance is one of the key conditions set by its creditors for its rehabilitation program and debt rescheduling.
"The discussions are still ongoing, but I understand the two parties are now looking for other kinds of cooperation," the official told The Korea Times in a telephone interview.
If HMM fails to join the 2M Alliance as an official operating partner, the debt-ridden container line will face difficulties securing much-needed financial help from the state-run Korea Development Bank (KDB) and other banks in a debt-for-equity swap.
According to Maersk Line in a press release, Monday, 2M and HMM are discussing ‘other possibilities' for the two parties.
"The parties discussed the possibility of HMM joining 2M as an operating partner, and have now decided to look at other cooperation possibilities," it said.
"The parties are therefore discussing the possibility of HMM partnering with the 2M network through a slot exchange and purchase agreement."
The discussions also include the possibility of Maersk Line taking over charters and operations of vessels currently chartered to HMM with the aim of deploying them in the 2M network, it added.
Unlike HMM's rosy expectations for a successful landing in the 2M Alliance, senior officials at both Maersk Line and MSC have said for months that HMM's entrance into 2M was not a given.
The U.S.-based The Journal of Commerce (JOC) first reported the possibility Friday that the 2M members have denied HMM full membership in the alliance, preferring instead to offer it slot sharing agreements.
HMM immediately claimed it was a false report.
"Maersk Line apologized and pledged to request a correction from the JOC," HMM was quoted as saying over the weekend.
"We will wrap up the official membership contract no later than early next month."
When contacting HMM about Maersk Line's confirmation Monday, an official couldn't conceal his embarrassment.
"Discussions are still ongoing, and we are still trying to conclude the deal by early December. We will see how it goes," he said.
Creditors also expressed their concerns about HMM's future.
"It is very disappointing to hear this. We thought HMM's entrance into the alliance was a given," a creditor group official said under condition of anonymity.
"However, there is nothing we can do at this point. I hope HMM concludes the deal as it promised."
In July, HMM signed a memorandum of understanding with Maersk Line and MSC to join the alliance. HMM's move was considered to be aimed at reducing costs and strengthening its competitiveness.
The nation's second-largest container line has said it would sign a formal agreement with Maersk Line by November after discussing in detail its operation under the alliance.
Hyundai Merchant Marine (HMM) won't be able to join the 2M Alliance, a global shipping alliance made up of the world's two largest container lines, Maersk Line and MSC, a Maersk Line official said.
This will likely deal a severe blow to HMM's efforts to normalize its management and operations, as joining a global shipping alliance is one of the key conditions set by its creditors for its rehabilitation program and debt rescheduling.
"The discussions are still ongoing, but I understand the two parties are now looking for other kinds of cooperation," the official told The Korea Times in a telephone interview.
If HMM fails to join the 2M Alliance as an official operating partner, the debt-ridden container line will face difficulties securing much-needed financial help from the state-run Korea Development Bank (KDB) and other banks in a debt-for-equity swap.
According to Maersk Line in a press release, Monday, 2M and HMM are discussing ‘other possibilities' for the two parties.
"The parties discussed the possibility of HMM joining 2M as an operating partner, and have now decided to look at other cooperation possibilities," it said.
"The parties are therefore discussing the possibility of HMM partnering with the 2M network through a slot exchange and purchase agreement."
The discussions also include the possibility of Maersk Line taking over charters and operations of vessels currently chartered to HMM with the aim of deploying them in the 2M network, it added.
Unlike HMM's rosy expectations for a successful landing in the 2M Alliance, senior officials at both Maersk Line and MSC have said for months that HMM's entrance into 2M was not a given.
The U.S.-based The Journal of Commerce (JOC) first reported the possibility Friday that the 2M members have denied HMM full membership in the alliance, preferring instead to offer it slot sharing agreements.
HMM immediately claimed it was a false report.
"Maersk Line apologized and pledged to request a correction from the JOC," HMM was quoted as saying over the weekend.
"We will wrap up the official membership contract no later than early next month."
When contacting HMM about Maersk Line's confirmation Monday, an official couldn't conceal his embarrassment.
"Discussions are still ongoing, and we are still trying to conclude the deal by early December. We will see how it goes," he said.
Creditors also expressed their concerns about HMM's future.
"It is very disappointing to hear this. We thought HMM's entrance into the alliance was a given," a creditor group official said under condition of anonymity.
"However, there is nothing we can do at this point. I hope HMM concludes the deal as it promised."
In July, HMM signed a memorandum of understanding with Maersk Line and MSC to join the alliance. HMM's move was considered to be aimed at reducing costs and strengthening its competitiveness.
The nation's second-largest container line has said it would sign a formal agreement with Maersk Line by November after discussing in detail its operation under the alliance.
