Hyundai Merchant Marine has vowed to take 5 percent of global market share by 2021 through various measures including its latest deal to join 2M, the company said Monday.

The Korean shipping company said it would concentrate on boosting cost competitiveness by focusing on the Asia-US route and raising wet bulk carriers rather than dry bulk carriers.

The company currently controls 2.2 percent of global container capacity.
 

“To become the final winner of global competition, (the company) will focus on raising revenues and operating profits, and improving service quality in the next two to three years,” HMM CEO Yoo Chang-keun said at a press conference.

“In the medium and long run, the company will become a shipper specialized in the US and Asia lines, based on its past experience of making up 5 to 6 percent of global market share.”

To support the company, its creditors, including the Korea Development Bank, vowed to inject about 300 billion won ($256.7 million) into it by this month.

Regarding the 2M partnership, the CEO stressed that it was the best result that the company could achieve. On Sunday, HMM reached an agreement with 2M to form a cooperative relationship instead of a full-fledged alliance membership.

Under the “2M+H Strategic Cooperation,” the two parties agreed to share surplus capacity through slot exchanges and purchases for three years, instead of sharing vessels.

“(Although some) may see the negotiation result as insufficient depending on viewpoints, (I believe) it is the best decision to make, considering the current situation. The actual characteristics or the form of the latest deal is similar to other alliances,” Yoo added.

If HMM’s financial health and liquidity status improves after three years, the 10-year 2M membership will also be available upon the agreement, the company said.

The Korean shipping company had initially sought to attain 2M membership as part of a move to meet conditions that its creditors had laid out as part of a restructuring plan. In July, HMM and 2M signed a memorandum of understanding for HMM to join the partnership.

The indebted company said the latest pact will raise workloads by 20 percent compared to before, as well as increase shipping lines.

However, the partnership has reignited controversy over creditors allegedly being lenient on HMM.

In July, the creditors had said HMM must met three conditions for a debt-for-equity swap: lowering charter cost, joining 2M and settling debt.

A deal on cutting charter costs, however, did not actually reduce costs but allowed shipowners to partially receive charter costs in the form of a long-term bond.

The creditors had considered the 2M memorandum in July as fulfilling one of the three conditions, but the 2M full-fledged membership deal also ended up just becoming a limited three-year pact.

There have been speculations that there is inconsistency in the way creditors are dealing with companies in the shipping industry, with HMM being compared to Hanjin Shipping, which faced bankruptcy.

HMM’s creditors, however, denied such allegations at the press conference, saying that Hanjin creditors seemed to have missed the right timing to reach a solution.

By Lee Hyun-jeong (rene@heraldcorp.com)