Hyundai Merchant Marine America

Hyundai Merchant Marine America

Chairman

www.hmm21.com

As enter 2004, the ocean carrier industry is showing a more stable trend in freight rates and volume. As expected, trade levels between the U.S. and Asia have improved, allowing shippers to better utilize their space. However, ocean carriers are confronted with rising operational costs while committing to the everyday business goals of running a profitable and efficient business. Freight rates, in turn, need to increase and continue to improve. It seems to be a common misconception that higher rates mean only higher profits for carriers. In actuality these higher rates offset higher costs of doing business. Stabilization of freight rates contributes to the growing capital investment costs of building vessels, as well as service upgrades.

Another reality that contributes to rising operational costs is the permanent consequences of the Sept. 11 terrorist attacks. There is a mutual concern in the industry to ensure the safety of individuals and better secure the seaports where millions of containers and billions of dollars worth of goods and products are imported and exported.

As a result, carriers and shippers have incorporated into their business routine the 24-hour rule and Customs-Trade Partnership Against Terrorism. We can expect more rule changes and spending more time and money to ensure proper training in the compliance of the new security plans.

The overall prospect for 2004 is optimistic. The continuous development of new security features coupled with service upgrades will help our industry become more and more efficient.