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Hyundai Merchant Marine (HMM) may have to settle for a slot exchange agreement with 2M partners Maersk Line and MSC, rather than full membership of the alliance.
HMM has been in talks with the 2M members since July on joining the vessel-sharing alliance next April. News that this won’t happen potentially undermines its ongoing financial restructuring.
Not becoming a full member of an alliance means HMM fails on one of the key conditions of its creditor financial restructuring process, led by the state-owned Korean Development Bank.
The attraction of HMM was said to be its transpacific business, which could lift the 2M’s relative weakness in the trade, compared with the rival Ocean and THE alliances, and a bigger ‘foot in the door’ of the Korean market.
However, the sudden collapse of Hanjin Shipping on 31 August was an industry game-changer that caused a shipper ‘flight to safety’ to Maersk and MSC.
In September, MSC’s senior vice president and head of Asia network, Caroline Becquart, hinted that, despite a memorandum of understanding signed by the three carriers in late July, HMM joining the 2M alliance was not yet a done deal.
And on Friday, a statement from Maersk Line said: “The parties have discussed the possibility of HMM joining 2M as an operating partner and have now decided to look at other cooperation possibilities.
“The parties are therefore discussing the possibility of HMM partnering with the 2M network through a slot exchange and purchase agreement.”
It added: “The partnership discussions are ongoing and include the possibility of Maersk Line taking over charters and operations of vessels currently chartered to HMM with the aim of deploying them in the 2M network. The discussions include how we can improve our products on the Pacific trade.
“The discussions are ongoing and we do not wish to comment further until there is any substantial development.”
However, HMM has denied that talks on its full membership of the 2M have broken down, and said it was “ironing out differences”.
But a source close to MSC told The Loadstar last week there was no expectation that HMM would join the 2M – “there’s no real advantage for us now”.
Alphaliner said HMM now needed to make a decision.
“The Korean shipping line is running out of time to either negotiate revised terms with the 2M, or to join a rival alliance.”
And as to its finances, after the political shambles surrounding the demise of South Korea’s biggest container line, its government would seem to have little choice but to continue to support what is now its ‘national’ shipping line, whether it joins an alliance or not.
HMM posted an operating loss of $452m in the first nine months of this year, but recorded a net profit of $206m during the period, due to asset sales. Carryings were down by 7% to 2.1m teu.