South Korea’s shipping companies grouping together into one alliance will not be enough to survive in a heavily consolidated shipping sector, according to Alphaliner's analysts.
The move by the Korea Shipowners’ Association involves partnering the country’s 14 container carriers, including Hyundai Merchant Marine (HMM) ⸺ the 15th largest ocean shipping company in the world, into a single shipping consortium called the Korea Shipping Partnership (KSP).
Global shipping analyst Alphaliner has said that acquisition is the only way forward for the carriers due to excessive competition in their common markets.
Alphaliner stated: “Such a far-reaching move, however, appears to be remote in the Korean context.
“The Korean carriers are expected to remain disadvantaged due to their fragmentation and lack of scale, with a combined share of less than 20% on the intra – Far East routre and less than 9% on the Far East – ISC/ME route.”
Alphaliner’s perspective on the situation has been followed by the news that HMM made an operating loss of US$ 112 million in Q2 2017.
In its regulatory filing, HMM stated that the third quarter would bring much better results.
It said: “Although revenues increased, which helped narrow the company’s operating loss, freight rates remained low, denting our bottom line.”