By Jhoo Dong-chan
Walmart, the world’s largest retailer with over 6,000 stores worldwide, is in talks with Hyundai Merchant Marine (HMM) to plug the hole left by the collapse of its long-time partner Hanjin Shipping, HMM said Wednesday.
“Discussions are underway with Walmart about a shipping operation contract,” said Yoo Chang-keun, CEO of HMM. The company has become the largest Korean shipper after the exit of previous business bellwether Hanjin.
Yoo also denied the recent news reports that Walmart has severed all its contracts with Korean carriers after the downfall of Hanjin Shipping, which caused substantial financial damages to the U.S. retail giant.
Walmart also told The Korea Times that recent news articles are “not legitimate.”
“The rumors and recent reports of Walmart refusing to do business with Korean shipping carriers are simply untrue,” Walmart Global Corporate Affairs Communication Director Marilee McInnis said.
“While we are no longer doing business with Hanjin Shipping because of their recent bankruptcy, we are currently speaking to another Korean carrier regarding our shipping needs.”
She did not mention who specifically Walmart is communicating with, but HMM said that it is in discussions with the former Hanjin Shipping’s consignor.
“It is still at the discussion level. So, I can’t say anything further about the discussions between the two parties,” an HMM official said.
“We are the only shipping company who is capable of swiftly replacing Hanjin Shipping’s operation for Walmart’s huge freight volume in the region.”
Walmart, which has been one of Hanjin Shipping's major consignors for more than 20 years since the 1990s, is believed to have been hit hard by the ailing shipping company filing for court receivership.
Hanjin had reportedly handled about 10 percent of Walmart's total freight volume every year, which means that the Seoul-based company’s amount was up to 30,000 containers. The annual shipping fee mounted to nearly 40 billion won ($35 million).
“Earlier this week, HMM’s credit rating was upgraded from D to BB as the market recognized the government and creditors' strong support for the company. I believe the credit adjustment played an important role behind Walmart’s decision to choose HMM as a bidder for the service,” the official said.
Sources claimed Monday that Walmart sent an email to Hanjin Shipping's local unit in the United States in December, saying, "Thank you for doing business with us. It is our company's policy not to deal with any Korean shipping line from now on. It is not because of Hanjin Shipping but because we don’t trust the Korean government."
Walmart’s denial of the allegations is considered to be a positive sign for Korean carriers, but experts suggested the possibility that such rumors were intentionally spread by foreign competitors of HMM.
“It is possible they spread such stories within the industry in order to gain the upper hand in contract negotiations between a consignor and a carrier,” he said.