Dive Brief:
- South Korean shipping line Hyundai Merchant Marine (HMM) will join ONE, Hapag-Lloyd and Yang Ming in THE Alliance, according to a press release emailed to Supply Chain Dive. The members have extended the partnership until 2030.
- THE Alliance is the smaller of the three global shipping consortiums, all founded within the last five years to make ocean shipping more profitable and provide better service by sharing vessels and slots. HMM has been allied with another alliance, 2M for the past two years.
- The new contract, signed June 19 in Taipei, Taiwan, is subject to regulatory approval and set to go into effect April 1, 2020 — the same time HMM's cooperation agreement with the 2M Alliance expires. The addition of HMM increases THE Alliance's total TEUs by roughly 11% but does not significantly change the ranking of the major ocean shipping alliances, according to Alphaliner data.
Dive Insight:
After HMM announced it was in meetings with Maersk and MSC aiming to "consolidate the relationship" between the carriers in April, the takeaway was HMM was looking to join the 2M alliance as a full member. The three lines have had cooperation agreements of one form or another in place since late 2016, when HMM was denied a spot in the 2M alliance for the first time on the grounds the carrier presented a financial risk. The April meetings ended without a new deal with The Wall Street Journal reporting 2M executives took issue with HMM's pending ship orders.
According to the Loadstar, THE Alliance also rejected HMM in the past. But Monday's news is confirmation that any hope of that long-sought 2M deal is dead and THE Alliance has welcomed HMM into the fold.
"HMM is a great fit for THE Alliance as they will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient – and it will help us also to further reduce our emissions," Hapag-Lloyd CEO Rolf Habben Jansen said in a statement. ONE CEO Jeremy Nixon touted The alliance's widening port coverage, product offerings and the better cargo balance he believes will result.
Joining an alliance has been a requirement HMM's creditors insisted upon in order to restructure its debt since membership in an alliance cuts costs by sharing ships. The line's losses in the last fours years reach into the billions. In March, former HMM CEO C.K. Yoo resigned and was replaced by Jae-hoon Bae in a move The Wall Street Journal reported was mandated by the line's largest creditor, The Korea Development Bank.
HMM has four 23,000 TEU vessels on order to be delivered in the second quarter of 2020 and eight new 15,000 TEU vessels on order for delivery in the second quarter of 2021. The latter vessels will be deployed in HMM's Far East - Northern Europe lanes.
