South Korean shipping major Hyundai Merchant Marine (HMM) is bullish on its performance in 2020, relying heavily on its new cooperation with THE Alliance and the deployment of twelve 24,000 TEU containerships.
The gigantic boxships, the largest in the world, are scheduled for delivery in April when they will start their deployment in the Far East-North Europe trade as part of THE Alliance’s itinerary.
“HMM will continue to secure additional cargos in preparation for the delivery of 24K class mega vessels in 2020,” the company said.
“In addition, HMM will offer qualified services through improved cost structure and diversification of service routes based on the cooperation with THE Alliance that starts in April.”
The switch to a new alliance comes as Hyundai Merchant Marine exits the three-year cooperation deal it had with the 2M carriers, Maersk Line and MSC since March 2017.
Furthermore, the company revealed that it wants to bolster its business structure through managerial innovation as well as digital transformation across the board.
The prediction on improved profitability is being made at a time when the shipping industry is facing growing pressure from external factors like the trade war between the U.S. and China and most recently the outbreak of coronavirus.
“In 2020, uncertainties stemming from the outbreak of the COVID-19, rising concerns over the global economic downturn, and the impact of U.S.-China trade conflict are weakening the prospects for rises in trade volume,” the company said.
The container shipping industry depends a great deal on China and its exports, hence, the liners have had to blank a number of sailings to mitigate the impact of factory closures in the country.
However, it is expected that the outbreak would be contained soon, and that trading would be normalized in the second half of the year.
HMM made the comment announcing its performance for 2019, which saw its operating profit improve by 45.6% YoY to KRW -304 billion.
The shipping company’s revenue in 2019 rose 5.6% (+ KRW 291 billion) YoY to KRW 5,513.1 billion and operating profit improved 45.6% (+ KRW 254.7 billion) YoY to KRW -304 billion.
Commenting on the fourth quarter of 2019, HMM said that its revenue declined due to bearish market conditions and weakening freight rates compared to the same period a year earlier, while operating loss has largely been narrowed owing to the continued rationalization of service routes as well as effective operation of five new VLCCs.