Disappointing Result
Hyundai Merchant Marine Co. (HMM) announced on December 11 that it has agreed with the 2M shipping alliance to form a new looser cooperative relationship named "2M+H Strategic Cooperation" and the agreement is scheduled to begin in April next year. The initial term of the cooperation is three years and it can be converted to the vessel sharing agreement (VSA), which was signed by Maersk Line and Mediterranean Shipping Co., after considering the HMM’s financial conditions.
However, HMM failed to form the VSA that runs for 10 years first. Under the latest deal, the cooperation is a combination of slot exchanges and slot purchases among the three parties but it is outside the scope of MSC and Maersk Line’s 2M VSA. HMM hasn’t become a full-fledged member of the 2M alliance, though it succeeded in increasing the tonnage by 20 percent compared to its membership of the G6 alliance. As the tie-up falls short of full-fledged membership, some say that the agreement is no better than the failure in joining the 2M alliance.
The government decided to provide support to HMM. This was largely due to the fact that it thought that the company, which completed renegotiation for chartered fees and readjustment for debts, signed a memorandum of understanding (MOU) with 2M and the MOU would lead to the membership of the world's largest shipping alliance. In the process, Hanjin Shipping, which was considered to be larger and more competitive than HMM, filed for court receivership. Accordingly, some say that the government’s restructuring plan in the shipping industry ended in failure as it made Hanjin Shipping, which already joined THE Alliance and was in talks over chartered fees at that time, to go into receivership with the trust on the MOU between HMM and 2M that carried no legal binding force.
The 2M parties didn’t allow HMM to become a full-fledged partner of the alliance because the Korean shipping businesses lost its credit among ship owners. As Hanjin Shipping, which had the world’s fourth largest market share on the U.S.-Asia route, collapsed, doubts about Korean shipping industry have mushroomed. It became a burden on 2M parties to accept HMM as a complete partner.
In addition, MSC, the second largest shareholder of Hanjin Shipping’s Long Beach Terminal in Los Angeles with a 46 percent stake, decided to acquire the remaining 54 percent stake, not by the consortium of HMM and MSC. MSC plans to sell a partial stake in the terminal to HMM after the takeover. However, it can be seen as MSC, which has the right of first refusal for Hanjin Shipping’s 54 percent stake, excluding HMM, which has low credit ratings. This was because it didn’t have to attract HMM as Maersk Line and MSC acquired a considerable amount of Hanjin Shipping’s business