Eco-friendly mega containerships are HMM’s global competitiveness
In September, HMM ordered twenty eco-friendly mega containerships, including twelve 23,000 TEU and eight 15,000 TEU vessels. With the vessel deployment in 2020, HMM expects that fixed costs will significantly decrease, fuel efficiency will largely improve, and that bunker costs will moderately decrease through installed scrubber systems for compliance with IMO 2020 environmental regulations. The timely deployment with this combination of cost competitiveness is expected to attract customers, partners and investors. Cost competitiveness and the mega containerships is in line with ‘Capacity of 1 Million TEU’ strategy that will play an important role for HMM in obtaining economies of scale. This strategy will lead to additional cost reduction.
Surely confident we can fill up the newly ordered mega containerships
HMM has largely recovered customer trust over the past two years. Since HMM’s recent new shipbuilding orders, improved financial stability and Korean public supports, customer expectations and trust for HMM’s service has remarkably improved. As a result, HMM’s vessel utilization level and handling volume has significantly increased. In terms of average utilization level (round trip), HMM achieved 75% in 2016, but it increased to 78% in the first half of 2018 and we expect over 80% in the second half of this year. HMM’s handling cargo volume has dramatically increased by 30% from 3 million TEU in 2016 to 4 million TEU in 2017 without fleet expansion, and now we expect 4.5 million TEU in handling volume in 2018.
Support and trust from our valued customers is evidenced by HMM increasing its Far East – Europe service market share by over 50% through its newly introduced AEX service, which has continually recorded full booking since its first sailing in April this year.
HMM has been in the container business for over 30 years since mid-1980’s, we operate 94 branch networks all over the globe, and conduct businesses with 7,000 regular customers per week. We see 7% market share in East-West trades by 2021 as an achievable goal for HMM with full confidence. Therefore, we believe the apprehension that HMM might have difficulties in filling up the mega containerships is unwarranted.
HMM’s financial structure remarkably improved through capital increase of KRW 1 trillion in last October
With the completion of capital increase of KRW 1 trillion through bond issuance in last October, HMM’s financial ratios including the debt ratio and cash flow have significantly improved. Further, HMM will improve its operating profits, though it is not an easy target in a short term. HMM will explore autonomous financing in the market if needed. HMM expects that its credit rating will be restored and capital attraction will accelerate from the second half of 2020 due to increasing operating profits plus investor and customer confidence.