Will Hyundai Merchant get upside momentum?

By Jhoo Dong-chan

Hyundai Merchant Marine (HMM) is expected to join the global 2M shipping alliance soon, giving the struggling shipping company, owned by the state-run Korea Development Bank (KDB), a boost.

Maersk Line Chief Commercial Officer Vincent Clerc said during a recent interview with the U.S.-based Bloomberg News that it will soon conclude a formal deal to allow HMM to join the alliance.

He said HMM will contribute to Switzerland-based container line MSC’s future operation by securing more containers to increase the volume of the alliance’s freight traffic. MSC is Maersk Line’s partner shipper under the 2M alliance.

“We will let our customers know what we will be up to by the end of the year,” he said.

An HMM creditor group analyst said it is “favorable signs for HMM.”

“Maersk Line and MSC are the world’s two largest shippers,” the analyst said. “The 2M alliance will help HMM’s future operation to a great degree.”

In July, HMM signed a memorandum of understanding with Maersk Line and MSC to join the 2M shipping alliance. HMM’s move was considered to be aimed at reducing costs and strengthening its competitiveness. Joining a global shipping alliance was also one of creditors’ conditions in the Seoul-based shipper’s self-rescue process.

HMM said it would sign a formal agreement with Maersk Line by November after discussing its detailed operation under the alliance.

Clerc also said that Maersk Line is not interested in taking over the nation’s debt-ridden Hanjin Shipping’s containers because it has enough for its ships. Hanjin Shipping is under court receivership and is seeking to secure liquidity by selling assets.

Maersk Line CEO Soren Skou also said in an interview with Bloomberg News that the company is willing to lose in the short term to dominate the shipping market in the long term.

“The industry is consolidating and in such a situation you have to make sure you keep growing so you don’t lose your market-leading advantage,” he said.

He said Maersk Line had an 11 percent rise in shipping volume because of Hanjin Shipping’s exit after court receivership.