The country's largest container shipping company, Hanjin Shipping Co., sees a relatively stable worldwide shipping market for the rest of this year with little to worry about, at least for the time being.
Global volumes should grow by 6 percent-8 percent, driven in large part by the enormous amounts of cargo coming from China, Indonesia and Malaysia, said M.H. Youn, Hanjin director and vice president of corporate planning.South Korean and Taiwanese lines are often lumped into the same category,
because they make up the world's leading non-conference carriers. But Mr. Youn said in some ways the management structure of Korean carriers is quite different from Taiwanese non-conference lines. In Hanjin's case, all overseas markets are closely controlled from Seoul, he said. "I don't think that's the case with Evergreen (Marine Corp.)"
Hanjin issues basic guidelines out of Seoul with local managers given some ability to work within those guidelines. "From time to time there are problems because they get demands from clients to go beyond the guidelines," he said.
Quick answers from Seoul aren't always possible because of time differences and impatient clients who can't wait until the next day for an answer. In these cases, Hanjin makes exceptions, he said.
"We are a bit more flexible. Even if they go beyond the guidelines and it's urgent, they can make the decision."
Most carriers face similar problems, Mr. Youn said. The problem is trying to find a balance between some form of central- ized control to be responsive enough to customers while you still keep a check on downward rate pressure and competitive industry frenzies.
One shift the industry is now facing is the strengthened position of shippers, Mr. Youn said.
Shippers, however, may disagree, given the buoyant rate picture this year and the recently enacted surcharges and add-ons.
But Mr. Youn believes while there may be some ups and downs, the trend is in the shippers' favor, with fewer major traders controlling more of the business. This gives them added leverage.
The Hanjin official said the industry went though a very difficult period in the 1980s, but lines are now much more understanding on the need for consensus and the danger of hitting the panic button and causing a downward rate spiral.
Shipper demand for improved service at the same or lower rates has prompted
innovative new partnerships and an emphasis on improved economies of scale.
Mr. Youn believes this will mean more difficulties ahead for medium-sized carriers. Where shippers used to want 700 20-foot equivalent units of containers transported a week, now it is 100 TEUs a day. "That means more frequency, more vessels," he said. "The medium-sized carrier can't do that."
Most lines around the world have chosen to go into consortiums. Evergreen remains one of the notable exceptions. Mr. Youn said Hanjin for years thought independence was the only way to go.
But one or two years ago, it started to look closely at whether it could really be competitive by going it alone. It recently decided to link up with DSR Senator Line and Cho Yang Shipping Co. under the service name Tricontinental. The problem all lines have faced, he said, is the longer you wait, the fewer partners there are left. Mr. Youn said his line doesn't consider Cho Yang and DSR Senator as separate players but views them as one combined partner.
Asked whether he thinks conference and non-conference lines can compete on the same ship, given all the new consortium links, Mr. Youn said it's a problem but not an insurmountable one. If market conditions are good, the shipper is more concerned about quality. "If things are bad, they care more about price."