HMM Moves Forward with Growth Strategy Ordering Heavy-Lift Ships

South Korea’s largest carrier, HMM, is moving forward with its business strategy despite the strong downturn in the container segment which was fueling its profitability and the pending sale of the company by Korea’s state-run banks. HMM has now signed a contract for the construction of four new multi-purpose heavy-lift ships following earlier reports of construction contracts for car carriers and containerships as well as secondhand market purchases of tankers and bulkers.

After returning to profitability during the two-year surge in container volumes and rates, HMM in July 2022 detailed a five-year strategy calling for $11.4 billion in investments. Much of the investment management said would go to new vessels as well as for terminals and logistic facilities. The strategy calls for increasing the container capacity to 1.2 million TEU as well as growing the bulker fleet.

Yesterday, HMM entered into a construction contract for four 38,000-ton multi-purpose heavy-lift ships to be built by Huangpu Wenchong, a subsidiary of China State Shipbuilding Corporation (CSSC). The ships are being designed by the Shanghai Merchant Ship Design and Research Institute (SDARI) and will be equipped with three cargo holds, hydraulic folding hatch covers and hoisting hatch covers, two sets of 400 tons cranes, and one set of 200 tons cranes.

HMM has been active in the heavy lift segment since 2007 and currently has four 12-year-old 30,000 dwt vessels. They plan to use the new ships to expand in the segment. The design is reported to be capable of handling a diverse range of cargo types, from dry bulk and oversized cargo to containers to hazardous materials.

In the spring, it was also reported that HMM had ordered three car carriers to be built in China for delivery in 2026. Each of these vessels will have a capacity of 8,600 vehicles, making them among the largest class of PCTC vessels. 

HMM, which has been absent from the vehicle transport segment for many years, was reported to also be exploring other segments for growth. They were among the bidders for Hyundai LNG Shipping, which was separated from the company during the reorganization, and which is going up for sale from its private equity owners. HMM has also ordered the construction of new containerships.

This expansion comes as HMM reported yesterday that its revenues were down by half in the first half of 2023 due to the declines in the container segment. Net profit was down by 90 percent so far in 2023 to just over $450 million with the company citing “an overcapacity, mainly led by the influx of new containerships ordered during the pandemic and supply chain normalization at major ports and inland regions.”

The first deadline in the bidding process for the privatization of HMM is just 10 days away. Korea Development Bank and Korea Ocean Business Corporation announced plans to sell the government’s investment in the company taken during the reorganization of Hyundai Merchant Marine. Reports in the Korean media said five companies had registered to receive packets before the August 21 deadline. The advisory group set up by the banks will review initial proposals from the bidders. The government plans to select one company and proceed to final negotiations on the terms of the acquisition. The plan calls for finalizing the deal by 2024.