Industry Wants Hanjin Shipping to Merge with Hyundai Merchant Marine
The Korea Shipowners’ Association (KSA) has officially suggested Hanjin Shipping merge with Hyundai Merchant Marine (HMM) to prevent court receivership and liquidation, reports Business Korea.
This is the first time that the industry recommends the merger of the two companies. As placing Hanjin Shipping into court-led restructuring will co-destruct the nation’s shipping businesses, the company should stabilize the business and merge with HMM later.
The KSA and the Federation of Korea Maritime Industries, which consists of 48 organizations in the maritime sector, plan to officially submit such a recommendation to the government and financial businesses.
“When Hanjin Shipping goes under court receivership, the company will definitely not revive but liquidate. In this case, 1.2 million containers, which move along with global shipping lines, will be paralyzed, creating great logistical disturbance,” says KSA.
The decrease in sales and transshipment container cargos of Hanjin Shipping and soaring shipping costs will cause annual losses of 17 trillion won (US$15.25 billion., said Kim Young-moo, executive vice-chairman of the KSA.
2,300 employees working in the the port and trade industries in Busan can lose their jobs. So, Hanjin Shipping should be normalized first and merge with HMM later in order to reduce costs and improve competitiveness. "This is the best option for now," said Kim.
Industry watchers expect that Hanjin Shipping’s filing for court receivership will have an adverse effect on HMM.
Although HMM joined the world's largest container shipping alliance “2M,” the company is in much worse external and internal conditions than other members like Maersk Line and Mediterranean Shipping Co. (MSC).
Maersk and MSC, the world’s two largest container shippers, have 623 vessels and 493 vessels, respectively, accounting for 15.37 percent and 13.39 percent in the market share. However, HMM has only 60 vessels with a 2.1 percent market share.
