News / HMM move will reshape the shipping alliance landscape again

The incorporation of South Korean carrier HMM into THE Alliance from April next year will see the alliance arena change once more. 

According to Alphaliner, HMM’s participation in THE Alliance will add some 519,000 teu of capacity, boosting the vessel–sharing group’s global market share from 25% to 30%, almost matching the 2M and closing the gap on the Ocean Alliance’s just–shy–of-40% dominance. 

The consultant said that although alliance members Hapag-Lloyd, ONE and Yang Ming were yet to disclose their revised network plans after the integration, HMM’s twelve 23,000 teu scrubber-fitted newbuilds would almost certainly be deployed between Asia and North Europe.

Its 15,000 teu vessels, stemmed to be delivered in the second quarter of 2021, are expected to go into service on the transpacific Asia-US east coast tradelane. 

Moreover, the 2M is expected to redeliver to HMM nine 10,000-13,000 teu vessels, which Maersk and MSC sub-chartered as part of the conditions of the 2017 2M-HMM slot swap co-operation that resulted in the enforced withdrawal of HMM-operated tonnage from the Asia-Europe and Asia-US east coast routes. 

Alphaliner noted that the president of Korea Development Bank (KDB), the chairman of Korea Ocean Business Corporation and the South Korean Minister for Oceans and Fisheries were all at the new THE Alliance agreement signing in Taipei on 19 June. 

It said it believed the Korean delegation provided financial commitments to ensure there was no repeat of the Hanjin Shipping collapse in August 2016 after the KDB refused to pump more money into the seventh-ranked carrier without the additional support of its Korean Air shareholders. 

The stand–off between Hanjin and the state-owned KDB resulted in insolvency and a loss of trust in the South Korean shipping industry. 

The new Korean government has pledged to do “whatever it takes” to support Korean shipping, as evidenced by the underwriting of HMM’s nigh–$2bn loss incurred in the past two years and a $2.6bn orderbook. 

Hanjin’s demise resulted in massive disruption and delay to not only the cargo on its 100–strong fleet, but also to the other member lines of THE Alliance, and the group subsequently established a $50m ‘contingency fund’ to address these issues should another member line become insolvent. 

Alphaliner said current contributions to the fund are $23.7m from ONE, $15.9m from Hapag-Lloyd and $10.4m from Yang Ming. HMM’s subscription to the  ‘insurance policy’ is not yet known. 

HMM will replace its 4,000-5,000 teu panamaxes deployed on its standalone (outside the 2M) AEX Asia-North Europe loop with the 23,000 teu ULCVs, as and they are received, albeit that some could be delivered before the start of THE Alliance agreement on 1 April. This would present HMM with the challenge of temporarily laying-up the vessels or operating them with limited cargo.