© Vladimir Serebryanskiy HMM
© Vladimir Serebryanskiy

Hyundai Merchant Marine (HMM) and SM Line remained in the red in Q3 as they continued their quest to rejuvenate the South Korean liner industry after the Hanjin collapse.

Nevertheless, HMM’s third-quarter operating loss of KRW28.3bn (US$26m), which included its terminal operation, represented a significant recovery from the same period of 2016 when the restructured carrier posted a loss of KRW212.27bn ($195m).

Revenue leaped by 20% on the same period of last year to KRW1.3 trillion ($1.2bn), and liftings grew 41% to 1.04m teu.

Following its exclusion from THE Alliance due to its parlous financial position, HMM joined the 2M VSA as a slot charterer on Maersk and MSC vessels from Asia to Europe and with standalone services on the transpacific trade.

Meanwhile, compatriot SM Line, which launched one Asia-US west coast service in April after it purchased the transpacific assets of bankrupt Hanjin, is still to turn a profit, according to analysis by Alphaliner.

Based on the container segment performance extracted by the consultant from the third-quarter results reported by parent Korea Line Corporation, SM Line contributed an ebitda loss of KRW12bn ($11m) in the third quarter, double the KRW6bn loss the quarter before.

Nonetheless, SM Line has continued to expand, particularly in the Middle East-to-intra-Asia trades, and is said to be eyeing a new Asia to US east coast route from the second quarter of next year.

“Despite the negative operating results, SM Line is continuing to expand rapidly,” said Alphaliner.

Indeed, liftings jumped from 97,000 teu in the second quarter to 142,000 teu in Q3.

Both HMM and SM Line face challenges with shippers and counterparties as they bid to overcome the damage caused by the demise of Hanjin and rebuild trust in South Korean liner shipping.

Elsewhere, only CMA CGM has yet to publish its third-quarter results – they are expected later this week – and the liner industry’s end of term report is one of “improvement, but could do better”.

Summing up the Q3 performance, SeaIntel chief executive and partner Alan Murphy suggested the numbers had “severely underperformed carrier expectations”.

He said: “While 2017 third-quarter freight rates certainly were an improvement over the horrendous 2016 third-quarter peak season, the improvement is marginal, and we are still significantly below the 2011-2014 period, and just barely at the level seen in 2015.”

Mr Murphy attributed the worse-than-expected liner performance in the period to ocean carriers “almost completely avoiding blanking sailings”, which he said led to low peak season load factors and softer spot rates.

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