Final Deal?
Hyundai Merchant Marine Co. (HMM) will finalize an agreement to join the world's largest shipping alliance 2M led by the world's two largest container lines, Maersk Line and Mediterranean Shipping Company (MSC), by the end of next week.
According to the government and shipping industry sources on December 1, officials from the three companies – HMM, Maersk Line and MSC will have a meeting in Copenhagen, Denmark, on the 6th (local time) to share the draft of the final contract, have legal review on the terms of the agreement and sign the final version.
HMM is expected to join the 2M alliance within the next week, but Maersk Line and MSC, which are eight to 10 times larger than HMM in terms of the number of ships, are continuously demanding HMM unfavorable conditions of the contract, according to news reports. Some say that HMM may have conflicting interests with the two 2M alliance members when joining the alliance as the size of HMM is apparently much smaller than them.
Maersk Line and MSC have one third of the global market share in total. On the other hand, HMM has a tiny 2.2 percent share in the global market. Consequently there is an analysis that even after joining the alliance, HMM would have some limit in realizing its full interest.
In fact, Maersk Line and MSC asked HMM to reduce the size of tonnage during negotiations for the alliance membership. Once it becomes a reality, it will be meaningless for HMM to join the alliance in order to expand business networks.
When HMM concludes the contract as 2M requested, it will be impossible for the company to expand tonnage since it can only conduct operations on some routes. In this case, both HMM, which aims to jump into a global leading shipping firm through the expansion of tonnage again, and the government will run into a snag in their plans.
In regard to the Wall Street Journal’s report on HMM’s failure in joining the 2M alliance released on November 30, Financial Services Commission (FSC) Chairman Lim Jong-ryong said, “HMM’s negotiation for the 2M alliance partnership is still underway and it will likely be wrapped up around December 10.”