DP's Lee proposing moving shipping giant HMM to Busan

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DP's Lee proposing moving shipping giant HMM to Busan

Published: 16 May. 2025, 15:19

Audio report: written by reporters, read by AI

The Korean container ship HMM Stockholm is loaded at the loading terminal Burchardkai in the harbour in Hamburg, Germany, on April 3. [REUTERS/YONHAP]

The shipping industry is abuzz after Lee Jae-myung, presidential candidate of the Democratic Party (DP), proposed on Wednesday relocating the headquarters of HMM to Busan.

Although HMM is a private company, as of Thursday, 76.86 percent of its shares are held by government-affiliated entities: 36.02 percent by the Korea Development Bank (KDB), 35.67 percent by the Korea Ocean Business Corporation (KOBC), and 5.17 percent by the National Pension Service.

This means that moving HMM’s headquarters from Yeouido, western Seoul, to Busan — its port of origin — may not be out of reach under government direction.

Opinions in the industry are sharply divided, with one side arguing the move would “infringe on the interests of a private company,” and the other saying it is “necessary for the advancement of the shipping industry."

HMM is Korea’s largest national shipping line, with a capacity of 913,867 TEUs (1 TEU equaling one 20-foot container), making it the eighth-largest globally. Last year, amid a shipping boom, it posted an operating profit of 3.51 trillion won ($2.5 billion) with a 30 percent operating margin, and retained earnings of 14.3 trillion won.

In 2016, following a restructuring of the shipping industry, HMM was separated from the Hyundai Group and normalized operations under the support of creditor banks such as the KDB. Its name was changed from Hyundai Merchant Marine to HMM in 2020.

Lee Jae-myung, presidential candidate of the Democratic Party (DP), waves to supporters during a campaign rally in Busan on May 14. [JOINT PRESS CORPS]

The DP’s road map for HMM's relocation is as follows: if elected, they would relocate the Ministry of Oceans and Fisheries to Busan in the second half of this year, followed by the maritime court in the first half of next year.

Then, they would relocate HMM’s headquarters and attract small and midsize shipping companies to build a shipping cluster in Busan. Candidate sites include Busan’s North Port or New Port.

“Policy and dispute-related tasks will become smoother, and synergy among shipping companies can be expected,” said DP Rep. Chun Jae-soo in a phone call. “It’s a centennial plan for the shipping industry.”

As of 2023, Busan Port handled 22.95 million TEUs annually, ranking sixth in the world, which Chun claims makes it a suitable headquarters location.

But opposition is also significant. Critics argue that if HMM is to attract high-value cargo and maintain its maritime transport network, it would be better off in Seoul, which has strong financial and human infrastructure. Denmark’s Maersk, the world’s second-largest shipping company, has its headquarters in Copenhagen, the country's political and financial hub.

Containers of Korean shipping company HMM are seen piled up at a port in Busan in this undated file photo [HMM]

“Global shipping companies choose their headquarters based on business efficiency,” said an executive from a shipping company, who wished to remain anonymous.

On Thursday, Lee Jun-seok, the presidential candidate of the Reform Party, criticized the DP's plan, saying, “The crux of the commercial law revision pushed by the DP is to regulate decisions by major shareholders or executives that run counter to the interests of general shareholders.”

“The government should avoid making pledges that increase uncertainty over the fate of individual companies,” he said.

Relocating the headquarters would inevitably inconvenience employees currently working in Seoul. As of the end of December last year, 1,063 of HMM’s 1,824 employees — those in management, sales, and accounting — work in Seoul and are opposed to the relocation.

On the other hand, seafaring staff working in Busan, accounting for 827 people, including captains, engineers and crew, are divided on the issue. The labor union is also split: The land-based union is under the Korean Confederation of Trade Unions, while the maritime union is affiliated with the Federation of Korean Trade Unions.

“It’s problematic to push ahead with a plan that could separate families without consulting the employees,” said Jeong Seong-cheol, head of HMM’s land-based union.

An HMM cargo ship is seen docked at a port on Sept. 7. 2019. [HMM]

“We will actively support housing and other needs during the relocation to Busan,” said Rep. Chun. “We will persuade and prepare thoroughly.”

The DP plans to partially fund the cost of HMM’s relocation and infrastructure building in Busan using the company’s retained earnings. However, there are concerns that if retained earnings are used for purposes other than investment and risk mitigation, it could hurt the company’s value and make it harder for creditors to sell off their stakes in the future.

One reason a February 2024 bid by the Harim-JKL Partners consortium to acquire HMM fell through was reportedly the demand by the KDB and KOBC that “Harim limit the use of retained earnings.”

“To recover the approximately 7 trillion won in public funds spent on restructuring HMM, privatization should take priority over relocation,” said Lee Jong-cheon, emeritus professor of accounting at Soongsil University.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM HYO-SEONG [[email protected]]