HMM Should Use Surplus Cash To Double Size Of It’s Box Ship Fleet

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HMM should use the earnings from the Covid-19-powered shipping boom to double its box ship fleet, to 1.7m teu, according to Kim In-hyeon, a maritime law professor at Korea University and a new member of South Korea’s ruling People Power Party.

8th largest liner operator

HMM, the eighth-largest liner operator, currently operates more than 784,000 teu, 565,000 teu of owned tonnage and the rest chartered, and it has 25 newbuildings, of around 251,000 teu, on order.

Prof Kim noted that only 20% of South Korea’s exports to the US and Europe is carried by domestic carriers, and said HMM needed a larger fleet to compete more effectively against its peers.

While Yang Ming and ONE are HMM’s fellow members of THE Alliance, Prof Kim suggested: “As the EU and US strengthen competition laws, it has become difficult for shipping companies to maintain a cooperative system in which they share ship operations, making the future outlook uncertain.”

Reserve exceeding secured

Prof Kim added: “As HMM has secured reserves exceeding KRW10trn ($7.5bn), the company must break away from the practice of financing 70% to 90% of ship acquisitions with borrowings. This will reduce the company’s debt ratio by increasing the self-funded proportion to 50% and avoid being hit in a downturn.”

On the recent collapse of efforts to sell HMM to a Harim Group-JKL Partners consortium, Prof Kim suggested that the company’s largest shareholder, state policy lender Korea Development Bank, should reorganise the carrier’s “chaotic” corporate atmosphere; it should “seek to stabilise HMM’s management and then go through the sale process again”, he said.

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Source : Loadstar

 

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