According to Alphaliner the Korean carrier HMM saw its container operating earnings (EBIT) decline in the second quarter of the year, the first quarter-on-quarter fall since the Korean line turned profitable in Q2 2020.
Despite higher container revenues, at KRW 4.7 trn, HMM reported EBIT from its container operations of KRW 2.89 trn (USD 2.2 bn), a drop from the KRW 3.13 trn posted in January-March.
Group net profit also fell quarter-on-quarter to KRW 2.9 trn versus KRW 3.1 trn in Q1.
It brings to an end seven consecutive increases in operating earnings for HMM since its return to profitability two years ago.
The results contrast with competitor lines Maersk, Hapag-Lloyd, Evergreen and ONE, who all reported higher earnings for the April-June period compared to the first three months of the year, and suggests
a two-tier market may be forming between those carriers with high contract cover versus those more reliant on the spot market.
HMM’s average rates fell in Q2, at USD 3,387 per teu versus USD 3,713 in January-March, a drop of nearly 8%. Volumes were stable compared to the previous quarter, but down 5.9% year-on-year.
As of end July, HMM operated 51% of its capacity on the Far EastEurope trades and 30% on the Far East-North America route, one of the least diversified of all the major carriers.
The company strategy is now to sign more mid-to-long term contracts with major shippers, increase profitability from inland, special and frozen cargoes, and flexibly manage its temporary vessels.
What next for privatisation?
With the huge uncertainty in the market and signs the line may not be capitalising on the contract rate boom, the optimum window for the long-awaited privatisation of HMM may be narrowing.
In an interview with the Maeil Business Newspaper on Friday, Korea’s Minister of Oceans and Fisheries Cho Seung-hwan called for the privatization to proceed while the market remained strong, saying
it would be ideal to liquidate some of the government’s stake before the shipping industry entered the down cycle.
The minister gave no timetable but acknowledged the government would likely have to sell stock incrementally given the size of its 70% stake.
Source: Alphaliner
