HMM’s Expansion Prospects Brighten With Hapag-Lloyd’s THE Alliance Exit

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  • HMM CEO Kim Kyung-Bae views Hapag-Lloyd’s exit from THE Alliance as a significant opportunity for South Korea’s flagship carrier to expand its market presence.
  • As Hapag-Lloyd prepares to form the Gemini Cooperation with Maersk Line next February, HMM sees a strategic chance for growth.
  • The departure leaves ONE, HMM, and Yang Ming as THE Alliance’s remaining members, prompting HMM to consider external consultancy to devise a mid- to long-term expansion strategy.

HMM CEO Kim Kyung-Bae believes that Hapag-Lloyd’s departure from THE Alliance will offer a significant opportunity for South Korea’s flagship carrier to expand its market presence. With Hapag-Lloyd leaving THE Alliance to form the Gemini Cooperation with Maersk Line next February, only ONE, HMM, and Yang Ming will remain as THE Alliance’s surviving members.

Strategic Planning for Expansion

Mr. Kim stated that HMM would select an external consultancy to devise a mid- to long-term strategy for the expected business expansion. Addressing the speculation that HMM could work with its compatriot container carriers, he mentioned, “Our basic position is that we will open any window for dialogue with local operators if there are opportunities. We always keep room for cooperation open.”

Korean Government’s Fleet Expansion Plan

South Korea’s Ministry of Oceans and Fisheries recently promulgated President Yoon Suk-yeol’s plan to increase the locally owned container shipping fleet to 2 million TEU by 2030. By then, HMM aims to expand its containership fleet to 1.5 million TEU from just over 800,000 TEU. The ministry has allocated approximately $2.5 billion to help other South Korean container carriers expand their fleet to 500,000 TEU.

Analyst Insights and Speculation

Linerlytica analyst Tan Hua Joo suggested that SM Line, as the only South Korean operator of long-haul routes, would be a suitable partner for HMM. However, its fleet of 68,500 TEU is not sufficient to fill the gap in the alliance left by Hapag-Lloyd. Despite the addition of SM Line, THE Alliance will be left with 2.5 million TEU, making it the smallest alliance, although ONE and HMM have outlined fleet expansion plans. Mr. Tan noted, “The addition of SM Line will have an immaterial impact on THE Alliance’s competitiveness on the Asia-Europe and transatlantic where it will be significantly weakened by the departure of Hapag-Lloyd.”

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Source: The Loadstar