[Square] HMM Ultra-Large Vessel, Expected to Lead Global Market

Jang Young-tae, President of the Korea Maritime Institute.

Last April, HMM (formerly Hyundai Merchant Marine) deployed a mega-ship capable of carrying 24,000 twenty-foot container boxes on a European route for the first time. Going forward, 11 more mega-ships will be launched sequentially by September to continue international trade in the global shipping market. The launch of HMM’s mega-ships holds even greater national economic significance alongside the successful restructuring of HMM.

First, HMM is expected to dramatically improve profitability based on these mega-ships. Although it may seem late compared to global shipping companies that have been utilizing mega-ships since 2014 to significantly reduce costs, HMM also has the advantage of being a follower. By introducing mega-ships, HMM can drastically lower capital costs, operating expenses, and fuel costs, while adopting technologies that comply with strengthened environmental regulations since 2020, thereby gaining additional competitiveness compared to global shipping companies.

Moreover, it can be said that HMM has overcome the crisis in Korea’s shipping industry triggered by the Hanjin Shipping incident in September 2016. As is well known, the financial perspective that overlooked the national economic importance of shipping led to Hanjin Shipping’s court receivership, causing a global logistics crisis and damaging the logistics competitiveness of Korean import-export companies. According to an analysis by the Korea Maritime Institute, the Hanjin Shipping incident posed a risk of Korean import-export shippers bearing up to 1.4 trillion KRW annually in additional maritime logistics costs compared to Japanese shippers. However, supported by the government’s 'Five-Year Plan for Shipping Reconstruction' in 2018, HMM ordered 20 mega-ships and, based on this, began official membership activities in 'THE Alliance' this April, resolving issues related to international logistics competitiveness. In particular, cooperation with THE Alliance will greatly expand overseas ports connected to Korea and increase the number of ships entering Korean ports.

Long-term benefits beyond these direct advantages are also expected. The global shipping market is a representative arena of a silent war. Maersk (10 times the size of HMM), capable of transporting 4 million container boxes at once, has already transformed into a comprehensive logistics company. Based on the Fourth Industrial Revolution, global shipping companies are rushing to adopt blockchain technology and expand into platform enterprises.

For HMM to grow into a comprehensive logistics company that provides high-quality maritime logistics services to Korean import-export shippers, securing competitiveness in the core area of maritime transportation is a prerequisite. Just as it is impossible to enhance parcel delivery service competitiveness without vehicles, this is the strategic significance of launching mega-ships. In other words, HMM can play a leading role in building an international logistics network that Korean export manufacturing companies can trust and rely on 10 or 20 years from now.

Furthermore, HMM’s role in leading the direction of the Korean economy is also anticipated. With population aging and industrial restructuring, the national economic role of high value-added service industries is increasingly important. The shipping industry is a representative example of such high value-added service industries. The fact that Denmark and Switzerland, with smaller economies than Korea, have the world’s No. 1 Maersk and No. 2 MSC respectively, proves this. Additionally, Korean shipping and logistics professionals are playing a part in expanding export markets worldwide. The challenging spirit that leads the market amid fierce global competition will itself serve as the foundation for Korea’s progressive global expansion strategy.

When HMM establishes itself as a competitive logistics partner that solves customers’ (shippers’) difficulties in the global market, let us not forget that our efforts to rebuild the shipping industry will bear fruit, and hope that the entire industrial ecosystem moves forward together.