Shipping industry continues to struggle
By Jhoo Dong-chan
Korea’s shipping industry, which once boasted the world’s fifth-largest market share, is still struggling despite efforts from financial firms to salvage it.
Hanjin Shipping, once the nation’s largest container line, is likely to face liquidation, while another shipping giant, Hyundai Merchant Marine (HMM), failed to become a full-fledged member of global shipping alliance 2M.
According to a report Samil PricewaterhouseCoopers (PwC) submitted to the Seoul Central District Court, Tuesday, liquidating Hanjin Shipping is a better option than letting it continue doing business. The court had been handling Hanjin Shipping’s insolvency measures and appointed Samil PwC in September to assess the ailing container line’s financial status after it filed for court receivership in August.
The court will soon make a final decision based on Samil PwC’s assessment.
An industry insider said the fall of the world’s former seventh-largest shipping company has signaled a crisis in Korea’s shipping industry.
“Hanjin Shipping’s court receivership caused a massive logistics disturbance in the global shipping network with more than half of its ships stranded at sea out of fears they may be seized by creditors. It was a huge blow to the credibility of the nation’s shipping industry,” he said.
“Shippers now do not want to take such risks anymore. This was the prime reason why 2M did not accept HMM’s membership request.”
HMM has put its utmost efforts over the last six months into joining 2M as a full-fledged member. Joining a global shipping alliance was one of the key conditions set by its creditors for its rehabilitation program and debt rescheduling.
Maersk Line, the world’s largest container line under the 2M alliance, said Sunday, however, that it and Mediterranean Shipping Company (MSC) have instead entered into a strategic cooperative agreement with HMM, a cooperation “outside the scope of MSC and Maersk Line's 2M vessel-sharing agreement through membership in the alliance.”
Due to HMM’s high market shares on Asia-to-North America shipping routes, Maersk Line and MSC had considered grant HMM membership in the alliance, but shifted their position as they have already increased market shares on the routes after the fall of Hanjin Shipping.
According to Busan Port Authority, Hanjin Shipping's market share in the Asia-to-North America route was 7.78 percent in October 2015 but plunged to 1.1 percent in the same month this year. Likewise, its share in the North America-to-Asia route has nosedived from 8 percent to 0.01 percent over the same period. The government had counted on HMM to fill the gap, but HMM was outbid in purchasing the assets of Hanjin Shipping's Asia-North America route, as well as its stake in a California terminal by mid-size bulk shipping operator Korea Lines.
In the meantime, 2M's market share in the Asia-to-North America route increased by 3.5 percent to 17.5 percent while its share in the North America-to-Asia route rose by 7.8 percent to 24.16 percent.