HMM looks at mega boxships to double tonnage by 2022

1/11/2018

South Korea’s Hyundai Merchant Marine plans to double its fleet by 2022 with the launch of mega boxships to make itself more competitive.

In a New Year address to staff, chief executive CK Yoo said HMM had endured “several years of hardship” but was now in a position “to grasp the precious opportunity for rebound”.

He said 2017, which included a restructuring and partnerships with the 2M alliance and the K2 consortium, had “laid a solid foundation for our long-term plan where we continue to consider ways of doubling our vessel capacity by 2022, including the launching of mega containerships, as we deem the environmental regulations in 2020 as a golden opportunity for our resurgence.”.

HMM has ordered or acquired five very large crude carriers and a pair of 11,000 teu boxships that comply with the International Maritime Organization's 2020 sulphur cap regulations.

“We will make the most of the new order for five VLCC vessels as a precious momentum pivot for strengthening long-term business partnerships with prime customers over 2020,” Mr Yoo said.

“We need to design competitive products in newly added services in the east-west lane and offer a variety of differentiated products to the market, combined with expanded coverage in Asia through the co-operation with K2,” he added. “We should also seek to double the efforts for sales promotion for the upgraded service with the implementation of proper pricing and marketing tactics.”

The company is also considering ways to order a series of 22,000 teu mega containerships and boosting tonnage to over 1m teu.

The mega boxship orders will help the company meet international emissions regulations such as the 2020 global sulphur limits set down by the International Maritime Organization.

In the dry bulk sector, the company intends to renew its fleet once the older chartered-in vessels it operates are returned to owners. “We should exert great efforts to re-establish relationships with customers in preparation for better market conditions,” said Mr Yoo.

He told staff: “We have gone through a long tunnel, and see the light of hope at last.” But he added: “This year is likely to be another year of uncertainty. According to the latest reports from various maritime research institutions, in which they are positive about the prospects for the world economy this year overall, they cite protectionism, unstable oil prices and regional oversupply of tonnage as negative challenges for the shipping industry.”

Last October, HMM raised over Won600bn ($555.9m) in liquidity from the sale of 120m shares and intended to allocate about Won200bn for vessel acquisitions and Won200bn for terminal investments on the US east coast, Vietnam, Singapore and Busan, among other locations, it said in a recent earnings report.