HMM profit shoots up as freight rates rise

An HMM container vessel [YONHAP]

HMM’s net profit jumped more than 600 percent on year in the second quarter on sales led by higher freight rates and increased container handling volumes.

HMM, the largest shipping company in Korea, reported 211-billion-won ($180 million) net profit, up 650 percent from the same quarter last year.

It reported 2.91 trillion won in revenue in the April-June period, up 111 percent on year.

“Container handling volumes increased 8.4 percent to 1.93 million TEU (twenty-foot equivalent unit) in the first half of 2021 compared to 1.78 million TEU in the first half last year,” said HMM in a statement.

The earnings were led by higher freight rates, increased container handling volumes and efficient fleet operations, including twelve 24,000 TEU container ships, according to HMM.

The Shanghai Containerized Freight Index (SCFI), an index reflecting freight rates on export container ships from Shanghai, stands at 4,281.53 as of Friday, up more than 250 percent from the same period last year.

“The highly elevated freight rates are expected to last through this year at the least," HMM said. "The global supply chain will remain strained, resulting from terminal congestions in major ports, the shortage of both vessel space and containers and increased cargo demand.”

The spread of Covid-19 variants and insufficient vaccination programs in some countries is another factor that could pressure global trade.

HMM saw its earnings significantly improve this year, but that could aggravate the management-labor conflict.

HMM labor unions are demanding more than a 20 percent increase to their wage, saying the increase is necessary after wages were frozen from 2012 to 2019. Management proposed a 5.5 percent raise.

The unions filed for mediation to the National Labor Relations Commission and threatened to push for a strike if no agreement is made through the commission.

HMM is 24.96 percent owned by Korea Development Bank, its creditor.

BY JIN MIN-JI [jin.minji@joongang.co.kr]