HMM may have to merge with Hanjin to join THE Alliance
Meanwhile, the struggling South Korean ocean carrier said in a statement Sunday it expects to reach an agreement with ship owners regarding charter rate renegotiations “soon.”
The local media outlet reported a tie-up may now be required in order for HMM to join the newly formed THE Alliance vessel sharing agreement, which currently includes Hanjin; Hapag-Lloyd of Germany; Japan's Mitsui O.S.K. Line (MOL), Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha ("K" Line); and Taiwan-based Yang Ming.
The report cited an anonymous South Korean government official, who said there was only enough room in THE Alliance for one Korean line.
“It is said that the THE Alliance has one spot for South Korean national flag carriers in view of the number of regular lines, the number of vessels in operation, the size of the Port of Busan, etc.,” the official said. “For both Hyundai Merchant Marine and Hanjin Shipping to join the alliance, the six global shipping companies in the alliance have to provide their consent before September this year, which is practically unlikely.”
When THE Alliance was announced earlier this month, HMM said it would be able to join the new VSA once its business was “normalized” following a voluntary debt restructuring that includes renegotiating charter rates with ship owners.
“The government has provided the same conditions for both companies, that is, donation by the largest shareholders, charter rate reduction and debt restructuring,” added another official. “If one of the two fails to meet the requirements, there is no way but the other one absorbing it after a court receivership procedure.”
Meanwhile, HMM said in a statement Sunday it expects to reach an agreement with ship owners regarding those charter rate renegotiations “soon.”
“HMM has been negotiating charter fees with 22 foreign ship owners, and made significant progress so far,” the company said. “It is expected to see a swift agreement soon.”
According to HMM, the carrier has achieved “meaningful progress” in negotiations with five containership owners, and has also submitted final proposals to bulk ship owners.
“There is a series of speculative reports based on incorrect information regarding charter negotiation. Such ill-informed can pose serious threats to not only our on-going discussions about charters but also the company’s business normalization,” HMM added. “We firmly ask media to take extra care when reporting about the matter until the charter negotiation completes successfully.”
The company plans to provide an update on the progress of its charter rate renegotiation and seek the support of its creditors at bondholder meetings scheduled for May 31 and June 1.