Thursday, July 14, 2016

Container Lines Accept New Member Into 2M Vessel Sharing Agreement

Financial Hurdles Successfully Vaulted by Korean Freight Carrier
Shipping News Feature
SOUTH KOREA – WORLDWIDE – Hyundai Merchant Marine (HMM) has fulfilled its commitments to its restructuring terms following the South Korean container carrier’s acceptance into the 2M Vessel Sharing Agreement (VSA). Starting April 2017, HMM will join the world’s two largest container shipping lines, Maersk Line and the Mediterranean Shipping Company (MSC), subject to regulatory approval and final negotiations, to provide an improved joint service for all three on worldwide trade routes.

The 2M (no mention of a new name for the VSA as of yet) global market share will be boosted further from what is already the largest such grouping, and could potentially see significant service improvements for shippers on the Trans-Pacific trade route. 2M + HMM would tip the VSA’s global market share to over 30% and with rumours circulating of another possible addition to the family with Israeli carrier Zim, also interested in becoming a partner of the 2M alliance, the market share could potentially expand further, though the global regulators and anti-trust bodies will doubtless be considering the ramifications of further expansion closely.

All this is of course happening at a time when many in the worldwide container freight industry consider collaborations as possibly the only viable way to stay competitive in a strained market. To achieve the current position HMM has successfully completed all conditions set out in the voluntary agreement with creditors from March 2016 and, in accordance with the completion of such preconditions, the planned debt-for-equity swap by creditors will be executed as previously determined. Upon completion of said debt-for-equity swap, HMM says the financial structure of the company will be significantly improved and should put HMM in sound position to meet future challenges. Speaking on the corporate outlook, a spokesperson for HMM, said:

“Based on the company’s sound financial structure, HMM will put its utmost efforts into improving our service offering to clients and to continue increasing operational competency in the second half of this year to continue improving profitability of our company.”