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Hyundai Merchant Dropped from 2M Alliance Agreement

HMM
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By MarEx 2016-11-22 22:38:57

Maersk Line has confirmed reports that Hyundai Merchant Marine (HMM) will not join the Maersk-MSC 2M Alliance. Instead, the 2M partners will look at alternative arrangements, like taking over some of HMM's leased vessels or entering into a slot purchase agreement.

The news contrasts with recent statements by 2M executives that HMM's share of Asia-to-U.S. trade was too good to pass up. "It's a cutthroat race to win market share, so [HMM’s] three percent is not negligible," an unnamed executive told the Wall Street Journal last week. 

The news that HMM would not be included in 2M was first reported by JOC on Friday, and HMM disputed its accuracy over the weekend. An HMM spokesman said Monday that discussions are ongoing and that the line would still try to close the deal as planned, according to Korea Times.

HMM narrowly avoided bankruptcy in May, and its creditors required the struggling line to enter into an alliance agreement as a condition for restructuring its debt. HMM had hoped to join the newly formed THE Alliance, but it was ultimately left out; without membership in 2M, it may face challenges in future talks with lenders.

Maersk and MSC's reported interest in taking over the charters of HMM vessels mirrors their recent charter agreements for nine container ships formerly belonging to bankrupt Hanjin Shipping – the line's largest and most modern vessels. 

Shortly after Hanjin's bankruptcy filing, South Korea's Financial Services Commission said that as a matter of policy, it would "promote sales of Hanjin Shipping's core assets to Hyundai Merchant Marine in a bid to maintain competitiveness of the [domestic] shipping industry." But as with Hanjin’s best ships, HMM has lost out on Hanjin’s core business unit: on Tuesday, the bulker operator Korea Line completed the purchase of Hanjin's main Asia-U.S. business. Korea Line also won an option to buy physical assets, including five container vessels and Hanjin's majority stake in Total Terminals. It will be the firm's first venture in container shipping.