Wednesday, April 11, 2018

South Korea Aims to Restore Shipping Fleet with Mega Container Vessel Order

Intent is to Carry One Million TEU and Leapfrog Chinese Rivals
Shipping News Feature
SOUTH KOREA – Hyundai Merchant Marine (HMM), seemingly basking in the fact that it is now South Korea's main global container carrier following the collapse of Hanjin Shipping, has announced plans to increase its box capacity to 1 million TEU with an initial order of twenty newly built eco-friendly mega containerships; twelve above 20,000 TEU, for the Asia – North Europe routes, and eight 14,000 TEU vessels, for shipping on the US East coast trade lanes.

Currently the twelfth largest container shipping company in the world with just over 350,000 TEU, the strategy is to bring its capacity to 1 million TEU over the coming years will see HMM leapfrog OOCL (which will most likely have been integrated into Cosco China Shipping before the end of the year if it finally gains approval in the US) to take eighth place, just behind Evergreen.

Considering factors including the recent increase in new shipbuilding prices and dock availability, HMM has sent out its Request for Proposal (RFP) to shipbuilding companies and, with the International Maritime Organization (IMO) moving forward with a marked reduction in the maximum sulphur content bunker fuel oil from 3.5% to 0.5% on January 1, 2020, HMM says that it will opt for scrubber installation or LNG bunkering for all the newbuild vessels after holding thorough discussions with the finally selected shipbuilder, in order to comply with the new environmental regulations.

If the shipbuilding process proceeds smoothly followed by the selection of the shipbuilder, signing of a Letter of Intent (LOI) and finalising its contract, all the new vessels will be sequentially delivered in the right time to prepare for the 2020 environmental regulations.

The investment in its fleet is aimed at boosting HMM's competitiveness in the international market following a recent announcement of the South Korean government's ‘5 Year Plan for Rebuilding Korean Shipping’ which will see the government help local shipping firms place orders for 200 ships by 2020, including 60 container vessels and 140 bulk carriers.

Korean imports and exports slumped to 400,000 TEU in October 2017 from over a million just 14 months previously. Strategy and Finance minister Kim Dong-Yeon said on Monday the plan aimed to raise almost $50 billion in revenue in the next four years, but uncertainty stalks the shipping lanes as the currency rose against the dollar this week to its highest level in over three years, inhibiting exports. Although there was a subsequent slight drop back in exchange rates, concerns over the current heightening of a trade war between the US and China will tend to make the situation unpredictable.

Photo: The Hyundai Hope, currently one of the five largest container ships in the HMM fleet at 13,154 TEU and therefore smaller than any of those in the proposed order of twenty vessels.