Drewry: HMM Joining 2M Suggests Hidden Agenda

Financially troubled Hyundai Merchant Marine (HMM) is in talks with 2M carriers Maersk Line and MSC to join their alliance. However, these three carriers are not obvious partners, in terms of culture, size or trade mix, which hints at a hidden story, according to shipping consultancy Drewry.

Last week, the financially troubled South Korean carrier Hyundai Merchant Marine (HMM) engaged in talks with the world’s two largest lines, Danish shipping firm Maersk Line and Mediterranean Shipping Company (MSC) about the possibility of joining them in the 2M alliance.

“This is a significant shift in mood music from HMM, which until recently was in danger of being a container pariah, locked out of the new alliance structures for next year after years of heavy losses,” Drewry said.

HMM made an operating loss of USD 136 million in the first quarter 2016 from all activities, but progress is being made on its large debt-restructuring process headed by their main creditor, the Korea Development Bank (KDB).

HMM has raised some cash through asset sales and expects to collect another USD 2.2 billion through a new share issuance, while bondholders and financial lenders have agreed to debt rescheduling terms.

There is even talk that the company will order 10 x 14,000 TEU newbuilds before the year is out, according to the consultancy.

“As it stands, the company has successfully met two of the three conditions creditors laid out for the debt relief programme and a bargain for holding off a court receivership, and now could be on the verge of meeting the third condition – finding an alliance home,” Drewry said, adding that this move “could simply be posturing designed to rebuild its reputation, or to convince THE Alliance members to agree to it becoming a member as reports suggested that some member carriers were unconvinced.”

As HMM would only swell the 2M’s share of nominal capacity on the Asia-Europe and Asia-North America trades by about 2%, the alliance would seem to have more value to HMM than to Maersk and MSC.

However, Drewry believes that there is a number of possible reasons behind the move, one of which could be that the Korean government, concerned for its ailing shipping and shipbuilding industries, has called upon the 2M carriers to ride in and rescue HMM in return for favourable shipbuilding contracts or banks loans.

Furthermore, the shipping consultancy said that Maersk could be preparing to acquire HMM or enter a joint venture with it, or even that “HMM wants to play off 2M against THE Alliance.”

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