The consolidation of the ocean freight sector continues, as Hyundai Merchant Marine (HMM), a South Korean container liner shipping company, has joined The Alliance conglomeration of cargo carriers.
HMM combines forces with Alliance members Ocean Network Express (ONE), Hapag-Lloyd and Yang Ming, which have also decided to establish a new cooperation agreement through 2030. The new contract between the four lines will start on April 1, 2020, subject to the necessary regulatory approvals.
A series of mergers and alliances of the major ocean cargo carriers in the last several years has created greater efficiencies in route management and curtailed the overbuilding of fleets to serve competitive markets. While importers and exporters were concerned over diminished choice and greater price controls by the large shipping companies, freight rates have generally held steady by the tighter controls and external macroeconomic forces.
Michael A. Khouri, chairman of the Federal Maritime Commission, testifying before Congress last year, said, “Alliances can be very beneficial for U.S. exporters, importers and consumers. Such alliances allow participants to obtain efficiencies and cost-savings that can be passed on to domestic consumers especially when healthy competition exists among vessel operators.”
Drewry’s composite World Container Index (WCI) increased 1.7 percent, or $23 to $1,353.13 per 40-foot container (FEU) or the week ended June 27. The average composite index of the WCI, for year-to-date, was $1,464 per FEU, just $10 higher than the five-year average of $1,454 FEU.
HMM said it has ordered 12 new 23,000 TEU 920-foot equivalent unit vessels to be delivered in the second quarter of 2020, with another eight 15,000 TEU ships joining its fleet in the second quarter of 2021. HMM’s new megaships will be deployed in the Far East–North Europe trade route and will further strengthen The Alliance’s service portfolio, the group said.
Jeremy Nixon, CEO of ONE, said HMM’s membership in The Alliance “will allow us to offer enhanced services to our customers due to a wider port coverage, expansion of our product offerings, more sailing frequencies and a better balance of our cargo flows.”
The Alliance was founded by Hapag-Lloyd, together with Kawasaki Kisen Kaisha (“K” LINE), Mitsui O.S.K. Lines (MOL) and Nippon Yusen Kaisha (NYK) (the three companies merged their liner services to become Ocean Network Express – ONE) and Yang Ming on April 1, 2017. ONE was then created on July 7, 2017 by the integration of ‘K’ Line, MOL and NYK. The Singapore-based ocean freight carrier has regional headquarters in Hong Kong, the U.K., U.S. and Brazil.
“We are convinced that we will be successful and generate additional value for our customers, employees and shareholders with combined experience, strategic skills, competitive fleet and strong focus on our clients’ needs,” Jae-hoon Bae, president and CEO of HMM, said.