South Korea’s flagship container shipping company Hyundai Merchant Marine (HMM) has confirmed a long-rumored plan to order 20 eco-friendly mega containerships at South Korean shipyards.
The shipbuilding plan announced Tuesday calls for twelve vessels above 20,000 TEU and eight vessels of 14,000 TEU, which will be deployed on the Asia to North Europe and U.S. East Coast trades.
The announcement comes just a few days after the South Korean government announced its own plan to help the country’s ailing shipping and shipbuilding industry amid weak global demand for ships and offshore rigs. The multi-year downturn has resulted in massive losses for South Korean shipbuilders as well as the bankruptcy of Hanjin Shipping, once the nation’s leading carrier. HMM recently also underwent its own painful debt restructuring.
Hyundai Merchant Marine says it has already started the process of selecting shipyards for the newbuilds and on Tuesday it sent out Request for Proposals to shipbuilders.
Assuming all goes as planned, the new “eco-friendly and highly efficient” vessels will be delivered in time for the IMO’s low sulphur regulations beginning in 2020, the company said.
For HMM, the order kicks off its strategy of increasing its fleet capacity by 1 million TEU over the next three years, which the company says will help it gain global competitiveness through economies of scale.
The order comes despite HMM posting losses exceeding $1 billion in 2017, causing some to doubt the company’s long-term aspiration of becoming a “leading global carrier.”
“HMM has been making its concerted efforts in all sectors, since its restructuring plan was implemented in the second half of 2013. HMM has focused on securing financial liquidity through KRW 4 billion restructuring plan including sales of controlling stake in affiliates and other property,” the company said.
“Through the acquisition of the most technologically advanced mega containerships, we can strengthen cost competitiveness and react rapidly to the international environmental regulations,” HMM said in its announcement. “HMM will do its best to become a global top carrier to meet expectations of related organizations and shareholders.”
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