Jae-hoon Bae, the newly installed president and CEO at HMM, South Korea’s flagship carrier, has wasted little time hopping on a plane to Europe to discuss alliance matters with partners Maersk and Mediterranean Shipping Company (MSC). HMM’s vessel sharing agreement on the main east-west trades with Maersk and MSC comes up for renewal next April. Bae is meeting with his counterparts in Copenhagen and Geneva this week to try and thrash out a deal to extend the partnership.
Bae, who previously worked with local supply chain firm Pantos Logistics, took over from CK Yoo at the loss-making liner late last month.
There have been a number of personnel changes at the Korean liner since Bae came in with much of the board changed and Park Jin-ki, a former senior executive at defunct Hanjin Shipping, selected as the new head of HMM’s containership business, which accounts for 90% of the group’s sales.
Bae’s discussions with Maersk and MSC will be vital for the company’s future.
“It is difficult to envisage the value that 2M gets from having HMM in the mix, and it might not be totally surprising if the existing arrangement ends in April 2020,” commented Andy Lane from Sea-Intelligence.
HMM will start to take delivery of some huge ships at around this same time, and if not in an alliance, offering sufficient frequency and direct port pair coverage will be a challenge, as will filling them.
Although HMM commands a relatively small market share, adding its capacity to the Ocean Alliance at a time when all eyes are on the block exemption regulation in Europe, might not pass regulatory hurdles.
If joining THE Alliance this would not be an issue, Lane observed, however HMM would enjoy a significantly lower slot cost than its new partners.
“With the Japanese and German governments lobbying the WTO on unfair shipbuilding subsidies, this marriage might not fly. Might HMM need to operate autonomously?” Lane mused.