In Down Market, HMM Takes Delivery of World's Biggest Boxship
The South Korean government plans to increase its support for national champions in shipbuilding and shipping with billions of dollars in new financial assistance, President Moon Jae-in told media on Wednesday.
"The shipping firms are expected to suffer more serious damage after the second quarter, considering the time lapse between the global economic turmoil and the decline in their performances," Oceans Minister Moon Seong-hyeok told The Korea Herald. "Thus, South Korea plans to provide the firms with more liquidity in advance."
In particular, state-owned Korea Development Bank (KDB) will spend $380 million to pay down maturing debt for loss-making Korean carrier HMM. KDB is HMM's largest shareholder and largest creditor, having previously injected $1.7 billion in funding in 2017 and an additional $850 million in late 2018. The long-troubled company has posted losses for the last 17 quarters in a row.
The announcement of additional aid came on the same day that HMM took delivery of the world's largest boxship, the 24,000 TEU HMM Algeciras, which will enter service in a heavily oversupplied global market. President Moon personally attended the naming ceremony.
HMM ordered the Algeciras and 19 additional newbuilds from the KDB-backed "Big Three" Korean shipbuilders in 2018, using $2.6 billion in financing from KDB. These ships were HMM's main hope for competitiveness: in its 2019 earnings report, issued prior to the COVID-19 pandemic, it highlighted "a chance to return to profitability after 2Q 2020 with our new cost-competitive ultra-large containerships."
Despite the headwinds facing this mega-ship strategy, Korea's government has pledged its support. “The government will be with companies till the end so that the shipping industry can ride out the coming wave,” President Moon said. “For me, it is very meaningful that HMM takes delivery of the most technologically advanced containership in this difficult time. I would like to celebrate it and hope that HMM continues to secure a competitive advantage as a Korean national flagship carrier.”