HMM still in the red but cuts loss to US$719m in 2018 with revenue growth
SUBSIDISED South Korean shipowner Hyundai Merchant Marine (HMM) has blamed increased fuel costs for the net loss of KRW808 billion (US$719 million) last year, down from KRW11
SUBSIDISED South Korean shipowner Hyundai Merchant Marine (HMM) has blamed increased fuel costs for the net loss of KRW808 billion (US$719 million) last year, down from KRW11.19 trillion in 2017.
Apart from increased fuel costs, the carrier also attributed the loss to the Iran sanctions and 'delay in rate recovery', reports UK's The Loadstar.
HMM transported 4.46 million TEU in the 12 months, an increase of 10.6 per cent from the previous year, as it stepped up its sales efforts.
In a brief comment on its sector trading, HMM noted that its volume to the US had 'increased due to the effects of the US-China trade conflict and the Chinese New Year holiday'.
However, because of its aggressive drive to regain the market share it enjoyed before its financial restructuring in 2016, when its compatriot Hanjin Shipping entered bankruptcy, HMM's revenue improved by only 3.9 per cent to KRW5.2 trillion.
'Overall freight rates were weak due to a delay in regional rate recovery,' said HMM, citing 'continuous competition' in the regional market.
On the bottom line, HMM said it was 'burdened' by fuel costs which were 32 per cent higher than the previous year, with the carrier paying an average of $424 per tonne for its bunkers.
HMM said that it would 'continue its efforts to stably secure additional cargo to fill up the newly ordered 20 eco-friendly mega-containerships until delivery'.
In October, HMM announced that the state-owned Korean Ocean Business Corporation (KOBC) had agreed to $5.4 billion of new funding for the carrier. Underwritten by the KOBC funds, HMM placed a $2.6 billion order with South Korean shipyards for twelve 23,000 TEU and eight 14,000 TEU vessels, which will be delivered from the second quarter of 2020.
The subsidy provoked a storm of protest from European and Japanese shipping associations, which accused the South Korean government of 'unfair competitive distortions'.
The arrival of the ULCVs next year will coincide with the expiry of HMM's slot charter deal with the 2M Alliance on the Asia-North Europe tradelane, which, it is understood, will not be renewed.
The Loadstar was told by a South Korean government source recently it had 'learned its lesson' from the damage the Hanjin crash did to the reputation of the nation's maritime industry, and the administration would do 'whatever it takes' to get HMM back to being a major player.
According to Alphaliner data, HMM's capacity - including its orderbook - will increase from the current 424,742 TEU to 820,742 TEU by next year, possibly enabling it to leapfrog Taiwan's Yang Ming to become the eighth-largest container carrier.