Kim Young-suk, the new Minister of Oceans and Fisheries for South Korea, has said that he does not see the benefit of the proposed merger between Hanjin Shipping and Hyundai Merchant Marine (HMM).
Kim added that in order to be competitive in the international market, finance is required to allow both shipping companies to acquire mega-ships, according to the Journal of Commerce.
Kim Young-suk said: “There are many ways of leasing ships, such as through bareboat charter following the establishment of funds by Export-Import Bank of Korea and Korea Trade Insurance Corporation, for example.”
Later adding: “I have never believed that the two companies should merge.”
The proposed merger between both shipping companies is said to be voluntary, without any influence by the authorities, although the original case was put forward by the South Korean government in a bid to boost it’s standing in the market place.
If any merger were to go ahead between the two South Korean liners, it would have a large impact on the alliances the two are already part of and create ripples through the wider supply chain.
A Senior Korean Industry Executive is reported to have said: “With just one shipping line, we could become less competitive with export rivals in the region, such as Japan. Our shippers are concerned about the potential reduction in competition and the effect this could have on rates.”
HMM previously denied claims that it was entering into a merger with Hanjin Shipping after it successfully completed a more than US$200 million convertible bond to restore liquidity, yet it remains a gamble in an uncertain market as to whether liners are stronger in mergers or as semi-independent entities in alliances.
In other news, Cosco and CSCL are in advanced talks to complete their merger, with the state-owned liners currently in the process joining shipping units. The deal could be completed as early as January, 2016, as China continues its drive to recover from a turbulent 2015.