South Korean shipping company Hyundai Merchant Marine (HMM) which has been ruled out of the new alliance forged between global carriers believes that its joining is “just a matter of time” and not a permanent exclusion.
Namely, as the company is currently amid its restructuring process and in final stage of talks with ship owners on lowering charter rates, it was not possible for it to join the new alliance at this stage.
However, HMM said that it was discussing its entrance into The Alliance in early June, when its business normalization procedure is expected to be completed, Yonhap news agency reports.
Based on the latest reports, HMM is to become a subsidiary of state-owned Korea Development Bank (KDB) within a debt-for-equity deal so as to avoid the company from going bust.
THE Alliance, revealed today, is scheduled to begin operation in April 2017 subject to approval of all relevant regulatory authorities and is composed of Hanjin Shipping, Hapag-Lloyd, “K”Line, Mitsui O.S.K. Lines, Nippon Yusen Kaisha and Yang Ming.
As a result of the announcement, HMM’s stock is reported to be affected, whereas the Hanjin Shipping stock is climbing up. Specifically, Hyundai’s shares were traded at KRW 11,450, up 10.20 percent (1,300 won) from the previous day’s closing price, while Hanjin Shipping’s stock was up by KRW 50 (2.62%) to KRW 1,960, the Korea Economic Daily writes.
The reshuffling of container shipping alliances comes as a welcome move toward consolidation as the industry is suffering from overcapacity and lower than ever freight rates.