HMM Plans $11 Billion Investment for Growth and Diversification

South Korea’s largest container shipping company HMM has become the latest carrier to announce growth plans fueled by the two-year surge in the container shipping industry. The company detailed a five-year strategy calling for $11.4 billion in investments both responding to “uncertainty arising from ever-changing business circumstances,” while also laying the foundation for sustainable growth. 

The shipping company, which is currently the eighth largest container carrier, said that it intends to invest in a range of initiatives cutting across core assets such as ships, terminals. and logistics facilities while also focusing on the issues confronting the shipping industry including digitalization and decarbonization. The five-point strategy is seen as the next step in the rehabilitation of the former Hyundai Merchant Marine, which in 2016 was separated from the Hyundai Group and rescued by the government-owned Korean Development Bank. KDB along with the state-run Korea Ocean Business Corp. currently own a total of more than 40 percent of the shipping line with reports that they were looking for a strategy as part of plans to begin privatizing the company in 2022.

“Our strategy is to ensure perpetual growth of HMM under the new vision - a global leading company generating sustainable value for the world,” said Kim, Kyung Bae, HMM President and CEO. Speaking to reporters in South Korea he said they were not currently discussing the timing and strategy for the privatization. He commented, “If we make the company stronger, its fundamentals will improve and enhance shareholder value.”

HMM’s five-year growth strategy focuses on five key business elements, with the majority of the investment for new vessels as well as terminals and logistic facilities. Currently deriving 90 percent of its income from the segment, HMM said it will nearly double container capacity to 1.2 million TEU from the current 820,000 TEU. The company also plans to expand its bulk fleet from the current 29 ships to 55 ships, which would increase its capacity by 90 percent. 

The total investment planned for ships as well as for the acquisition of terminals and logistics facilities is $7.8 billion. The strategy calls for the investment to be completed by 2026. As part of the effort, they will focus on the environment including possibly ordering new ships using alternative fuels and R&D efforts to support the goal of reaching carbon neutrality in 2050.

HMM also plans to continue its investments in its digital strategy. The company recently launched an online sales platform for customers. In the next steps, they plan to integrate their inland logistics network and apply freight rate solutions using artificial intelligence. HMM plans to invest $114 million in digitalization by improving its online-based platform and accelerating ERP upgrades.

Without providing further details, HMM said it will also invest $3.8 billion over the next five years in future strategic projects to diversify its business.

The investment plans come at a time when HMM is on a steady recovery trajectory after the Korean government made a debt deal to save the company from bankruptcy in 2016. HMM rebounded in 2021 reporting $11.5 billion in revenues and $4.6 billion in net profit. For much of 2021, there was speculation that the government was seeking a buyer.