HMM consortium with 2M officially launches

Hyundai Merchant Marine officially signed a deal with the world’s largest shipping alliance, a move that is expected to grant the company more vessel capacity on its service routes and a way to improve its financial health, the company said Thursday.

HMM CEO Yoo Chang-keun and heads of the 2M alliance, Soren Skou of Danish Maersk Line and Diego Aponte of Switzerland-based Mediterranean Shipping Company, agreed to establish the so-called 2M+HMM strategic cooperation in California on Wednesday.

The partnership is due to take effect on April 1 and last three years with an option to extend the terms.

While the cooperation is not quite an official alliance, which usually involves vessel sharing, it still allows slot exchange and purchases between the three as well as Maersk Line and MSC taking over a number of charters and operations of vessels from HMM.

According to the Korean shipper, the new partnership allocates 20 percent more vessel slots to its overall service compared to the current G6 alliance. As for the transpacific route, 50 percent more vessel capacity becomes available through the cooperation.

HMM has been operating two transpacific routes solely on its vessels, but it will operate three under the new partnership among five transpacific routes. The two remaining routes will be serviced by ships from Maersk Line and MSC. For HMM-operated routes, Maersk and MSC will ship cargo on exchanged vessel slots of 19 HMM vessels.

“We believe this strategic cooperation to be a win-win for all parties. Maersk Line’s customers will have greater options on transpacific trades and HMM’s customers will be able to leverage Maersk Line’s strong Asia-Europe products,” said Robbert van Trooijen, chief executive of Maersk Line’s Asia-Pacific operations.

April will be a fresh start for all other global shippers as well as the shipping alliances will undergo a massive overhaul. The past alliances represented by 2M, CKYHE, G6 and O3 will be reformed into three alliances - 2M+H, Ocean and THE - with some players going under like Hanjin Shipping or by mergers aimed at increasing economies of scale.

The 2M+H will have the largest fleet capacity with a global share of more than 35 percent, data from shipping market research firm Alphaliner showed Thursday, followed by Ocean alliance’s 26 percent.

HMM has been gearing up to accelerate business normalization in the reshaped shipping market. Last month, it signed a partnership to form a mini-alliance with two local shippers on intra-Asian routes with aims to strengthen its services there.

The company recently secured more than 850 billion won ($752.5 million) liquidity by selling vessels, recapitalization, issuing convertible bonds and also receiving funds from a government-led tonnage bank.

“Our credit rating has been raised to BB stable from D default in February and it is expected to improve further by our continuous efforts to enhance profitability and financial structure,” HMM said in a statement.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]