Korea Dreams it Big for HMM
The government of South Korea has decided to help Hyundai Merchant Marine (HMM), the nation’s only major shipping line, grow into a mega shipper by all means available, reports Business Korea.
The state plans to provide loans of up to 6.5 trillion won (US$5.68 billion) to domestic shipping firms, including HMM, so that they can grow in size and survive in the global chicken game.
The government has announced plans to raise the competitiveness of the shipbuilding and shipping industries.
The plans were focused on enlarging HMM, which is actually the only one global shipping company from the nation, in order to boost its competitiveness in the global market.
The game of chicken has continued in the global shipping market as global shipping giants, such as Denmark’s Maersk Line, Geneva-based Mediterranean Shipping Co. (MSC), and France’s CMA CGM SA, have cut shipping costs by increasing the number of mega ships that can carry a large amount of freight at once.
The nation’s two largest shipping companies – Hanjin Shipping Co. and HMM – misjudged the business situation and missed the opportunity to order mega ships. It lowered their cost competitiveness, and they had also spent a lot of money to charter ships.
As a result, Hanjin Shipping is now under a court receivership, while HMM is under a creditor-led debt restructuring scheme.
Meanwhile, the Korea Development Bank and the Export-Import Bank of Korea (Korea Eximbank) will establish Korea Ship Corporation worth 1 trillion won (US$873.36 million) by investing an 80 percent stake.
The new ship company plans to buy ships owned by domestic shippers, including HMM, at the market price and re-charter them at lower prices.