Shipping Industry After Dark Period, Expected Record High Performance This Year

[Asia Economy Reporter Dongwoo Lee] The shipping industry is expected to achieve record-high performance this year, fueled by the boom that has continued since the second half of last year. It is evaluated that proactive supply adjustments made in response to the spread of COVID-19 led to an increase in cargo volume, driving up maritime freight rates.

According to financial information firm FnGuide on the 28th, HMM's operating profit this year is forecasted to rise 133.9% compared to the previous year (980.8 billion KRW), reaching 2.2944 trillion KRW. The container ship boom, which accounts for about 90% of total sales, is expected to drive the performance.

The Shanghai Containerized Freight Index (SCFI), which represents the overall level of maritime container freight rates, stood at 2775.29 points as of the 26th, down 100.64 points from the previous week but still maintaining freight rates more than twice as high as the same period last year.

In particular, securities firms expect HMM to achieve additional growth by expanding routes through the delivery of eight 16,000 TEU (1 TEU = one 20-foot container) class vessels within the year.

SM Shipping is gearing up for an initial public offering (IPO) based on its record operating profit of 140 billion KRW last year, the highest since its founding. It is reported that SM Shipping has signed an underwriting agreement with NH Investment & Securities and set a concrete listing target for the second half of this year.

Using the funds raised through this listing, the company plans to actively develop new businesses such as expanding sales capabilities in the U.S. East Coast and Asia regions by investing in vessels and container equipment.

The container ship boom is also impacting the bulk carrier sector, raising expectations for a full-scale recovery in the market this year. This is due to China's economic recovery, which is increasing imports of coal and iron ore, and the expectation that China will resume imports of U.S. agricultural products.

Performance recovery is anticipated for Pan Ocean, which mainly operates bulk carriers. Researcher Yeonseung Jeong of NH Investment & Securities emphasized, “The announcement to resume a cash dividend of 50 KRW per share for the first time in nine years since the rehabilitation procedure is positive in terms of starting a shareholder return policy.”