South Korea’s Hyundai Merchant Marine (HMM) failed to strike a deal for full membership into 2M, the world’s largest container shipping alliance, settling instead for a “limited partnership” of slot exchanges and slot purchases with the group’s two members.
HMM, now South Korea’s No. 1 shipping line after the bankruptcy of Hanjin Shipping, said December 11 it has agreed to share vessel space with A.P. Moeller-Maersk and Mediterranean Shipping Co. under the 2M alliance. It will also reportedly purchase cargo slots on the two companies’ ships.
The Korean carrier said that while the agreement falls short of their expectations, they are guaranteed exclusivity in cargo sharing with the 2M members.
The strategic partnership covers key East-West trades and is expected to begin services on April 1, 2017 subject to regulatory approval. The initial term of the cooperation is three years with an option to extend full-fledged membership to HMM if its business results show an improvement.
Analysts said though that HMM has not achieved solid terms to weather the weak market at an alliance level and likely will soon have to reassess its strategy again.
For Denmark’s Maersk Line, the agreement is seen to provide it further traction, particularly in the trans-Pacific trade where 2M gets its hands on strong HMM products.
More information about network changes and schedules is expected to be announced in early 2017.
The tenuous partnership has been expected following reports last week that 2M was no longer thinking of encompassing HMM into its fold.
Since May, the debt-saddled Korean box line has sought membership into 2M to avert court receivership. HMM, which controls 2.2% of global container capacity, posted a US$556 million operating loss in the first nine months of this year as revenue fell 25% from a year earlier to $2.5 billion.
Meanwhile, Hyundai Merchant is seeking to take over key assets from Hanjin Shipping Co., which has been under receivership since September, reported Yonhap.
A consortium led by Hyundai Merchant is highly likely to be chosen as the preferred bidder for Hanjin Shipping’s U.S. port terminal, as a mid-sized local shipping firm has withdrawn its bid to buy a stake in one of the troubled shipper’s lucrative assets.
Photo: Alf van Beem
