HMM Asks KDB for 9.9 Trillion Won in Support Funds

According to industry sources including Hyundai Merchant Marine (HMM) on July 25, HMM recently submitted consulting firm AT Kearney’s report about HMM to the Korea Development Bank (KDB). The report says that HMM should receive a total of 9.9 trillion won (US$8.9 billion) in funds to grow into the 8th largest global shipping company in the future. The KDB is reviewing this report.

HMM requested the KDB to support HMM with a total of 9.9 trillion won (US$8.9 billion) until 2022. HMM asked AT Kearney to estimate how much support funds for HMM would be needed. AT Kearney calculated that a total of 9.9 trillion won will be needed, including 5.6 trillion won (US$5.0 billion) for large container ships, 3.3 trillion won (US$2.9 billion) for container boxes (2 million won or US$1,800 for each box) and 1 trillion won (US$900 million) for the takeover of overseas terminals.

“There has been no internal decision on the investment amount needed for the medium and long term, including the money for building new vessels and container ships. In relation with it, we have not made any request to the Korea Development Bank (KDB),” the representative from the shipping company.

The shipping industry says that if the government will support HMM with funds of nearly 10 trillion won after leading the world’s seventh largest shipping company, Hanjin Shipping to go under, it will pose a serious equity issue between the two companies.

"Although it was unclear whether or not Cho Yang-ho, chairman of the Hanjin Group will give up the right to manage Hanjin Shipping, if the government had shown its will in supporting Hanjin Shipping in the past as the shipping industry is a major channel for exports and a basic national industry, Hanjin Shipping which was the 7th largest shipping company in the world at that time would not have gone bankrupt and HMM which was the 15th largest shipping company in the world at that time would not ask the government to give them tax money of 10 trillion won (US$9 billion) in support funds,” said an official in the shipping industry, criticizing the government.

HMM posted 833.3 billion won (US$749 million) in operating loss last year. Its operating loss is expected to hit 400 billion won (US$360 million) this year.

In the meantime, HMM ranked fourth in overall sales with a month on month increase of 77% in cargoes to the west coast of the US among its US routes.

According to the US JOC 'Piers Data' on July 25, HMM's cargo volume to the west coast of the US from Asia grew 77% to 10,405 TEUs from 7953 TEUs in the same month of last year.

HMM’s ranking also rose from 12th place in June of last year to 5th place for the first time in April this year and rose to 4th place in June.

The total volume of cargoes to the Americas from Asia also surged 49% to 16,791 TEU in June of this year from 12,626 TEU in June of last year. Its share in the US west coast market rose 3.4%p to 7.4% from 4.0% in the same month of last year and its share in the entire American market increased 2.0%p to 5.8% from 3.8%