[181216.EN.SEA] Hyundai Merchant Marine Relegated to Slot Buyer in Humiliating 2M Deal

KOREA's troubled Hyundai Merchant Marine (HMM) has been relegated to slot buyer in its association with the giant 2M Alliance from full membership to something much less.

Under the new arrangement the 2M Alliance members Maersk Line and Mediterranean Shipping Co (MSC), will take control and marketing of HMM vessels on the Asia-Europe and Asia US east coast routes, according to Alphaliner.

Bad as it is the deal, announced December 11, has at least won the support of HMM's main shareholder Korea Development Bank, which had originally sought 2M membership for its continued financial backing.

The new deal to take effect in April, subject to regulatory approval, is for three years. Under the agreement, HMM will purchase slots on the 2M routes connecting Asia with North Europe, the Mediterranean and the US east coast, while continuing to operate Asia-US west coast services on its own, with Maersk and MSC taking slots.

HMM chief executive Yoo Changkeun told a press conference his company could still join the 2M Alliance if its balance sheet becomes healthy in three years.

Alphaliner said despite the highly unfavourable terms, HMM had little choice but to accept, since it was left out of the other two east-west vessel sharing agreements.

Said veteran observer SeaIntel CEO Lars Jensen. "This makes it clear that HMM is now in a direct fight for survival with a limited range of options, none of which appears very attractive. This will stem the bleeding from the east-west trades and eliminate the alliance issues, but let's keep in mind that the intra-Asian market is also highly competitive."

Source : HKSG.