South Korean shipping company Hyundai Merchant Marine (HMM) has managed to narrow its operating loss in the first quarter of 2019 on the back of increased revenues.
HMM reported an operating loss of KRW 105.7 billion (around USD 89 million), an improvement compared to an operating loss of KRW 170.1 billion from the first quarter of 2018.
The company’s operating income was affected by high bunker costs and the US-China trade war.
Revenues amounted to KRW 1315.9 billion for the first three months, an 18 percent increase compared to the same quarter a year before.
The increased revenues were explained by higher transport volumes and load factor.
Container handling volumes rose to 1.08 million TEU, an 11 percent increase compared to the 981,230 TEU handled in the same period last year.
HMM further said it expects the burden of high fuel costs on liners to increase due to the US sanctions against Iran, OPEC agreeing to cut oil production, and increased demand of low sulfur fuel oil in preparation for IMO 2020. Because of all this, the company has put its efforts into collecting the bunker surcharge to recover the higher fuel prices.
“HMM will maximize its efforts to strengthen profitability by successfully securing service contract with valued customers, rationalize its service network, attract high-value cargoes, and create competitive new service routes,” a company official commented.
“Given rising demand during peak season, both freight rate and container volumes are highly likely to increase in the second and third quarters.”
HMM added that it continues securing additional cargoes to fill up the newly ordered 20 eco-friendly mega-containerships slated to be sequentially delivered from the second quarter of 2020.
In addition, the company said it would look to improve its profitability by reducing the repositioning costs for empty containers and maximizing utilization of assets including terminal and vessels.