South Korea’s Hyundai Merchant Marine Co. (HMM) is gearing up to take over shipping terminals in Indonesia and Vietnam in a bid to expand its presence in the global market. HMM is now the country’s leading container carrier after once the world’s seventh largest shipper Hanjin Shipping Co. was put under court receivership.
HMM will employ a “two-track strategy” of acquiring stakes in shipping terminals in emerging countries such as Indonesia and Indonesia while the HMM+2K alliance will construct new ports at the regions where cargo handling will be concentrated, said Yoo Chang-keun, chief executive officer of HMM in an interview with Maeil Business Newspaper on Tuesday.
The container carrier recently created a home-grown shipping alliance dubbed HMM+2K with two local intra-Asia shippers Sinokor Merchant Marine Co., and Heung-a Shipping Co. after its negotiations to join the world’s largest shipping alliance 2M broke down.
The cargo unloading and loading charges at Korean and overseas ports takes up to 25 percent of HMM’s total expenses, said Yoo, adding that the company concluded it would become more “price competitive” by running its own shipping terminals.
The long-haul shipping service provider currently operates a total of 63 shipping routes from Korea to Asia, Americas, and Europe but it owns only three overseas shipping terminals - two in the United States and one in Taiwan. Hanjin Shipping before heading for court management managed 71 shipping routes and seven terminals abroad.
Moreover, HMM is mulling taking over Hanjin Shipping’s shipping terminals at Tokyo in Japan and Busan in southern Korea, while pushing for a plan to purchase Hanjin Shipping’s stake in the Long Beach Terminal in California by March with financial assistance from its largest shareholder and state-run lender Korea Development Bank.
“The oversupply issue in the global shipping industry is yet to be resolved,” said Yoo as he predicted that the industry will remain under pressure throughout 2017. “What matters most is to minimize losses by cutting costs before the company is able to turn a profit,” said Yoo, adding the container carrier also has prepared a contingency plan in case the market recovers at a much slower pace than expected.
The company has recorded operating losses for six straight quarters until the end of last September but Yoo is determined to achieve a turnaround by the third quarter of 2018.
The chief executive’s top priority is to attract large customers in February and March. “We will consider an option to give shipping priorities to large cargo owners during the peak season if they invest in HMM,” Yoo said.
By Kim Jung-hwan
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]