Hyundai Merchant Marine will sign an agreement to cooperate with Sinokor Merchant Marine and Heung-A Shipping for intra-Asia routes to facilitate the anticipated merger of the latter two companies’ container shipping operations.
All three companies are part of the Korea Shipping Partnership (KSP) and the announcement was made by the Ministry of Oceans and Fisheries (MOF).
On Wednesday Heung-A Shipping confirmed its intention to integrate its container shipping operations with those of Sinokor.
Both companies transport containers within Asia and, with HMM, are among 14 members of KSP, a quasi-alliance promoted by the MOF and Korea Shipowners’ Association to coordinate operations in the intra-Asia container segment.
The agreement between HMM, Sinokor, and Heung-A will be signed on Tuesday according to a MOF announcement.
Formed in August 2017, the commencement of KSP’s operations has been delayed, due to the restructuring of member carriers’ overlapping routes. The first stage of the restructuring involves the removal of three routes in the South Korea-Japan and South Korea-Southeast Asia lanes and the withdrawal of 11 vessels.
The second stage of the restructuring, according to the MOF, encourages integration and cooperation between the member carriers beyond mere cooperation on routes and slot swaps. This suggests that more consolidation among South Korean liner operators, especially when MOF official Eom Ki-doo said in January that the country has too many of such companies, making it a challenge for the KSP to succeed.
Sinokor operates 55,000 TEU in its fleet, while Heung-A operates 47,000 TEU, meaning that their merged operations would produce a combined capacity of more than 100,000 TEU, accounting for 34 percent of KSP’s estimated 300,000 TEU.
The latter figure excludes vessels deployed by South Korea’s largest liner operators, HMM and SM Line Corporation, which was set up by Samra Midas Group to acquire the portfolios of now-defunct Hanjin Shipping.
Through the agreement, HMM, now South Korea’s flagship carrier after the collapse of Hanjin Shipping, will engage Heung-A and Sinokor as its strategic partners, through close cooperation with the latter companies’ intra-Asia network.
Officials hope HMM’s collaboration with the merged container operations of Heung-A and Sinokor will produce synergistic effects, based on HMM’s core ocean-going business and the feeder operations of the intra-Asia carriers.
Minister for Oceans and Fisheries Kim Young-choon said, “The second stage of the KSP restructuring is the result of the member carriers’ voluntary efforts. The government too, will actively support the companies’ efforts where necessary.”
Contact Xiaolin Zeng.