Signs of Recovery
The businesses of Hyundai Merchant Marine and Hanjin Shipping are showing signs of recovery amid their liquidity crises.
According to industry sources, the global shipping companies including them have begun to raise their ocean freight rates. For example, those for the routes between Asia and Northern Europe and between Asia and the Mediterranean have been raised by US$500 to US$800 and by US$1,000, respectively.
In addition, the Shanghai Containerized Freight Index (SCFI) rose 170.1% for Northern Europe between the last week of last month and the first week of this month. Likewise, that for the Mediterranean rose 138.8%. The freight rate for shipment from China to the west coast of the United States via the Pacific Ocean increased by 18% to US$857 per FEU during the same period.
The recent trend has to do with shipping agents’ senses of crisis in the wake of the collapse of normal freight rates attributable to their excessive competition and recession in the industry. It is expected to help Hyundai Merchant Marine and Hanjin Shipping improve their financial structures as well.
In the meantime, the Baltic Dry Index (BDI) that reflects bulk carrier rates has continued to rise for a month, adding to expectations that the global shipping industry has hit the bottom. The BDI, which had hit a record low of 290 in February this year, recently reached 700 and is at 682 now. A BDI of at least 1,500 is regarded as a break-even point in the industry. At present, bulk carriers account for 18% and 6.7% of the sales of Hyundai Merchant Marine and Hanjin Shipping, respectively.
These days, French shipping company CMA CGM and Chinese shipping firms are moving to organize a new alliance called OCEAN. This has caused two shipping companies to get out of each of G6 and CKYHE, with which Hyundai Merchant Marine and Hanjin Shipping are associated, respectively. Under the circumstances, German shipping major Hapag-Lloyd, which is a member of G6, is looking to hold hands with shipping firms belonging to no alliance and both Hyundai Merchant Marine and Hanjin Shipping are expected to join Hapag-Lloyd’s new alliance in spite of their corporate restructuring processes.